Friday 29 Mar 2024
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KUALA LUMPUR (Aug 27): RHB Bank Bhd, which saw its net profit increase 7.9% quarter-on-quarter (q-o-q) to RM701.34 million for the second quarter ended June 30, 2021 (2QFY21), expects a challenging third quarter due to Covid-19 lockdowns, which have curtailed certain economic activities and the movement of people.

“The impact [of the lockdowns] will probably be seen in 3QFY21, where land offices are not open and showrooms for automotive are shut. It will definitely affect growth in mortgages and auto financing in 3QFY21," said RHB Banking Group managing director Datuk Khairussaleh Ramli during a virtual press conference today.

"While we were able to hold our performance steady in 2QFY21, we do see that challenge in 3QFY21 as a result of the lockdowns for certain economic activities.”

On a year-on-year (y-o-y) basis, RHB Bank's net profit for 2QFY21 gained 75% to RM701.34 million from RM400.7 million, with 2QFY21 earnings per share (EPS) at 17.49 sen compared with 9.99 sen a year ago. However, revenue declined 10% to RM2.93 billion from RM3.26 billion for 2QFY20.

Khairussaleh attributed the lower revenue to lower interest income as a result of a reduction in the overnight policy rate (OPR) to 1.75% — the lowest in Malaysian history.

“If you recall, the OPR dropped significantly last year. While revenue from interest income dropped, interest expense also fell, but at a much faster rate than the decline in income. Hence, net interest income, the key revenue item, actually went up,” he said.

A similar trend was seen in RHB Bank's financial performance in the first half ended June 30, 2021 (1HFY21), where net profit improved 39% to RM1.35 billion but revenue fell close to 10% to RM5.83 billion from RM6.47 billion ago.

RHB Bank declared an interim dividend of 15 sen per share for the financial year ending Dec 31, 2021 (FY21), consisting of a cash payout of five sen per share and an electable portion under a dividend reinvestment plan of 10 sen per share.

Meanwhile, the group’s gross impaired loan (GIL) ratio has been on a declining trend. As at June 30, 2021, the GIL ratio for the group stood at 1.63%, compared with 1.87% on June 30, 2020.

At the GIL ratio of 1.63%, it was a whisker above the industry average of 1.62%, but it is worth noting that the industry's average GIL ratio had increased from 1.44% on June 30, 2020.

Khairussaleh also shared that the percentage of borrowers under the PEMULIH package and repayment assistance plan amounted to RM47 billion of outstanding loan balances, or 28%, as at early August.

When asked how the recent loan moratorium will impact RHB Bank, Khairussaleh believes that the impact will be less compared to the blanket moratorium given out in March 2020.

“Last year, [it] was a blanket moratorium, where borrowers chose to opt out [if they didn’t need it]. With the current moratorium, it is an ‘opt in’ basis. The percentage of borrowers under this moratorium is about 28%, compared with 80% last year.

"So, certainly the impact on banks will be less compared to last year. But the key thing is to keep close contact with customers, to ask and understand the help they need,” he said.

On the group’s five-year strategy plan known as FIT22, Khairussaleh believes RHB Bank will be able to meet most of its targets, except for the return on equity (ROE) target of 11.5% given the pandemic and lockdowns.

“We have recovered this year in terms of the ROE. On a normalised basis, our ROE is at 10% and, hopefully, we can close at that level by the end of the year.

"We still have one more year before FIT22 ends, so we hope to be able to further improve the ROE. But we think it may not achieve 11.5% under the programme,” he said.

RHB Bank forecast that its full-year loan growth will come in at around 4% this year, driven by the mortgage, auto and small and medium enterprise (SME) segment. It believes that its Singapore operations will also lend support to loan growth.

RHB Bank shares closed up three sen or 0.55% higher at RM5.51 today, bringing it a market capitalisation of RM22.42 billion.

Edited ByKang Siew Li
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