KUALA LUMPUR (Feb 27) : RHB Bank Bhd foresees a competitive year for bank deposits as it foresees more businesses and consumers will be looking to earn cash in anticipation of higher interest rates.
RHB Banking Group’s managing director and CEO Mohd Rashid Mohamad said although the competition is not expected to be as intense as was seen in 2022, the expectation of a higher interest rate will play into the minds of depositors.
“My view is that it (deposit competition) is not going to be as intense as last year. Still there is an element of higher interest rate expectation, but it will not be as high as what we saw last year. Our inhouse call we are making for OPR (Overnight Policy Rate) is at between 25bps (basis points) to 50bps max. Of course it is very data dependent,” said Mohd Rashid at the group’s media briefing on RHB’s FY2022 financial results on Monday (Feb 27).
Bank Negara Malaysia is widely expected to raise the benchmark interest rate in the second Monetary Policy Meeting (MPC) after surprising the market with a rate pause in January, bucking the consensus estimate of a 25bps increase.
The current OPR rate stays at 2.75%.
He added that RHB Bank continuously looks into growing in the fixed deposits (FD) area by rolling more strategies in the segment.
“We want to focus on garnering deposits particularly from small-and-medium enterprises (SMEs), and mid-cap companies. We are already doing this via these customers' payroll accounts. With payroll being onboarded with RHB bank we will improve our current account and savings account (CASA) and fixed deposits.
“It (FD) is a very competitive market out there in terms of pricing. So, we are closely monitoring the FD pricing in the market,” he added.
For the financial year 2022 (FY2022) RHB’s customer deposits increased 3.9% year-on-year (y-o-y) to RM227.2 billion, attributed to growth in FDs and CASA of 6.7% and 1.3% respectively.
CASA composition stood at 29.2% whilst liquidity coverage ratio (LCR) remained sound at 162.1% as at Dec 31, 2022.
“I believe regarding non-fund based income, this year will be a better year compared with last year. In the last two months we saw a better pipeline in the non-income perspective. We are also focusing on wealth management fee income. We are also highlighting ourselves by focusing on Islamic wealth management to be offered to our customers,” he added.
The group’s gross loans and financing grew 6.9% y-o-y to RM212.2 billion, mainly supported by growth in mortgage, auto finance, SME, commercial, Singapore and Cambodia.
Domestic loans and financing grew 5.3% y-o-y.
Total assets for the group increased 7.3% from December 2021 to RM310.8 billion as at Dec 31 2022.
Net assets per share was RM6.76, with shareholders’ equity at RM28.7 billion as at end-December 2022.
He added the bank will continue to support vulnerable borrowers and monitor their repayment behaviour.
RHB recorded a 22% increase in net profit to RM772.11 million for the fourth quarter ended Dec 31, 2022 from RM631.16 million a year earlier, due to the absence of modification loss, as well as significantly lower allowances for credit losses on financial assets.
Revenue for the quarter grew 36% to RM3.95 billion from RM2.89 billion previously.
For the full year, RHB posted a net profit of RM2.71 billion, up 3.4% from RM2.62 billion for FY2021, with revenue growing 13% to RM13.27 billion from RM11.75 billion.
The group declared a second interim dividend of 25 sen, of which 20 sen will be cash and the remaining five sen can be opted for dividend reinvestment plans.
At the closing bell, RHB shares closed 2.3% or 13 sen higher at RM5.61, giving it a market capitalization of RM23.83 billion.