Datuk Khairussaleh Ramli: Over the medium term, our reframed strategy will make us more focused on creating shareholder value
KUALA LUMPUR: RHB Capital Bhd reported a set of credible earnings in the first half ended June 30, 2015 at RM1bil amid a challenging environment but expects its IGNITE 2017 Transformation Programme to gain traction and produce positive results.
RHB Capital said in the first half ended June 30, 2015, its earnings were slightly lower by 0.7% at RM1bil, compared with RM1.007bil in the previous corresponding period. Its revenue, however, increased by 10% to RM5.339bil from RM4.854bil.
Pre-tax profit was at RM1.337bil, down 2.9%. Excluding a one-off impairment write-back on other assets of RM112.4mil in 2014, the group?s normalised pre-tax profit was higher by 5.8%.
Group managing director of RHB Banking Group, Datuk Khairussaleh Ramli described the net profit for the first six months at RM1.0bil as "credible in this current environment."
"The global economic outlook will remain challenging in the second half of 2015. Domestic loan growth should moderate, on the back of softer consumer spending and private investment, while capital market and wholesale banking activities are expected to remain modest.
"In view of the challenging operating environment, the group will intensify its efforts on optimising cost and capital efficiency and managing asset quality,” he said.
Khairussaleh said RHB Baking Group's IGNITE 2017 Transformation Programme continued to gain traction and produce positive results.
"Over the medium term, our reframed strategy will make us more focused on creating shareholder value. Barring unforeseen circumstances, the group's 2015 performance will be satisfactory,” he said.
RHB Capital said the higher normalised earnings in the first hald was mainly contributed by higher total income and lower loan impairment charges, partially offset by higher other operating expenses.
On a year-on-year comparison, net fund based income grew by 0.4% to RM1.954bil. Gross fund based income increased 13.2% on the back of 9.2% growth in gross loans and financing.
Funding and interest expense increased by 24.2% mainly due to higher customer deposits base as well as higher cost of deposits, coupled with higher funding expense arising from issuance of sukuk and sub-debts totaling RM1.5bil and US$300mil senior unsecured notes in the second half of 2014.
As for net interest margin, it was was at 2.13% for the current quarter.
RHB Capital said other operating income and non-fund based income grew 8.0% to RM1.041bil, underpinned by higher investment income and higher fee income.
The group’s other operating income and non-fund based income to total income ratio stood at 34.8%.
However, other operating expenses increased 5.0% to RM1.662bil, mainly due to a 4.5% increase in personnel costs and increase in establishment costs and marketing expenses. Cost-to-income ratio stood at 55.5%.
In the second quarter ended June 30, 2015 RHB Capital Bhd’s earnings fell 5.7% to RM524.59mil in the from RM556.51mil a year ago on higher interest expense and the absence of impairment losses written back on other assets.
The banking group said on Friday the impairment was nearly RM7.59mil in Q2 FY15 compared with RM108.37mil a year ago.
However, there was a writeback on allowance for impairment on loans, financing and other losses at RM40.75mil in Q2 FY15 compared with a provision totaling RM17.35mil a year ago.
RHB Capital said its revenue rose 7.6% to RM2.64bil from RM2.45bil a year ago. Its earnings per share were 20.30 sen compared with 21.90 sen.
“On a sequential basis, pre-tax profit for Q2 FY15 was at RM692.4mil, up 7.4% from RM644.8mil in Q1, FY15. The higher profitability in Q2 FY15 was mainly due to higher impairment write back on loans, advances and financing, partially offset by higher operating expenses and lower other operating income,” it said.
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