This article first appeared in The Edge Financial Daily on August 27, 2019

KUALA LUMPUR: RHB Bank Bhd achieved 2.1% loan growth in the first half of this year (1H19) compared with 2H18. However, RHB Bank saw a commendable year-on-year (y-o-y) loan growth of 6.9% in 1H of financial year 2019 (1HFY19) compared with the previous corresponding period.

The banking group is keeping its annual loan growth target at 5%, which will be primarily driven by mortgages, small and medium enterprises (SMEs), and from RHB Singapore.

Nonetheless, RHB Bank Bhd group managing director and chief executive officer Datuk Khairussaleh Ramli explained that if the bank was to repeat its loan growth performance in 2HFY19, loan growth would only be at slightly more than 4%.

“So, I believe that there is still some room to improve and we have to catch up to be able to achieve the 5%,” Khairussaleh said at the press conference yesterday in conjunction with the release of the bank’s financial results for the first six-month period ended June 30.

He noted that the 2.1% year-to-date growth was due to high base effect as a result of a “big bump” in loans in 2H18. RHB achieved a loan growth of 5.5% in 2018.

In April, RHB Bank has announced its three-year target to disburse RM31 billion loan to SME by 2021. As at end-June 2019, the bank had achieved 27%, according to Khairussaleh.

In 1HFY19, loans approved are RM3.7 billion, while loans disbursed stood at RM2.3 billion.

To complete insurance arm sale by 1Q20

The negotiation and due diligence on the proposed disposal of up to 94.7% in RHB Insurance Bhd to Tokio Marine Asia Pte Ltd are still ongoing, RHB Bank expects to complete the proposed divestment by the first quarter next year (1Q20).

“We hope to complete the discussion by end of October this year and make a submission of the proposal to Bank Negara Malaysia (BNM) and ministry of finance for their approval by November,” Khairussaleh said.

Asked about the possibility of RHB Bank paying a special dividend from the insurance arm’s sale proceeds, Khairussaleh said: “We have yet to come up to that point in time, because we don’t even know what will be the valuation, and we need to look at what is our plan next year.”

“So, it is a bit premature for us to answer,” he said, adding that RHB Insurance contributes about 5% of RHB Bank’s profit before tax.