KUALA LUMPUR (Aug 26): RHB Bank Bhd's net profit for the second quarter ended June 30, 2019 rose 7.9% year-on-year (y-o-y) to RM615.41 million from RM570.26 million, on the back of non-fund based income and lower expected credit loss (ECL) on loans.
In a filing to the stock exchange today, RHB Bank said revenue for the quarter rose 12% y-o-y to RM3.42 billion from RM3.05 billion.
Earnings per share rose to 15.35 sen from 14.22 sen a year earlier.
The group declared an interim single-tier dividend of 12.5 sen per share for the financial year ending Dec 31, 2019. The payment date will be determined later.
The dividend is also the highest ever dividend payout based on first half 2019 results, representing a dividend payout ratio of 40.2%.
For the six-month period, its net profit was 7.3% higher at RM1.25 billion versus RM1.16 billion a year ago. Revenue gained 9.5% to RM6.77 billion from RM6.18 billion a year earlier.
In a statement in conjunction with its results, RHB Bank said its gross fund based income increased by 7.4% y-o-y on the back of a 6.9% increase in gross loans and financing, marginally negated by the impact of an overnight policy rate (OPR) cut in May 2019.
It said funding and interest expense was 16.4% higher mainly due to the impact from the OPR hike in January 2018 coupled with higher deposit base.
"As a result, net fund based income declined by 2.6% y-o-y," the bank said, adding that non-fund based income improved significantly by 21.8% y-o-y to RM1.1 billion, contributed largely by higher net trading and investment income, insurance underwriting surplus and higher capital market related fee income.
Its operating expenses rose by 2.7% to RM1.71 billion from a year ago due to higher personnel cost, IT-related expenses and marketing expenses.
"Cost-to-income (CIR) ratio improved to 48.5% from 49.1% a year ago," it noted.
Meanwhile, RHB Bank said allowances for credit losses was RM146.8 million, 8.1% lower than the previous year, primarily due to lower ECL on loans.
"Annualised credit charge ratio improved to 0.20% compared with 0.22% over the same period a year ago," it said.
Moving forward, RHB Bank said the economic growth for 2019 is expected to moderate to 4.5% against 4.7% recorded in 2018, as US-China trade tensions continue to weigh on Malaysia's external trade, further affecting the growth outlook.
"Banking industry loans are projected to grow at mid-single digit for the year, supported by a resilient household sector.
"OPR is expected to remain at 3.00% for the remainder of the year, although there is a risk of further reduction," it added.
RHB Bank group managing director Datuk Khairussaleh Ramli said the positive results are a testament to its ability to maintain positive growth momentum during challenging times.
"We are on track with our five-year strategy, FIT22, aimed at improving business performance and enterprise wide capabilities through digital technology and the implementation of the AGILE way of working.
"Our SME segment in particular has seen encouraging growth with almost RM4 billion loans approved in first half of 2019, benefitting around 2,000 SME businesses. SME loans and financing grew 3.3% year-to-date since December 2018, ahead of industry which declined by 0.4%.
"Moving forward we will continue to provide SMEs with a holistic ecosystem that are able to offer targeted and innovative products and value added services that will allow them to focus on growing their business," he added.
At the midday break today, RHB Bank shares fell 1.62% or 9 sen to RM5.48, valuing it at RM21.98 billion, tracking the broader market. The counter saw some 1.03 million shares traded.