KUALA LUMPUR: Lower total income and higher impairment losses for loans led RHB Bank Bhd to register a 11.4% year-on-year (yoy) lower net profit RM500.28mil for the first quarter ended March 31, 2017.
In a filing with the Bursa Securities on Tuesday, the bank announced that its net fund based income declined by 1.2% yoy to RM1.09bil, as loans growth and lower funding expenses were offset by margin compression. In addition, the non-fund based income was also 2.7% yoy lower at RM462.2mil.
“Allowances for impairment on loans and financing increased to RM132.4mil from a year ago, primarily due to additional individual impairment allowances provided on certain corporate accounts that were classified as impaired last year,” said RHB Bank in the filing to the stock exchange.
The bank’s top line for the first quarter of financial year 2017 dropped by 3.4% to RM2.62bil, in contrast to the RM2.71bil registered a year earlier.
With regard to the bank’s gross loans and financing, it was 3.2% higher yoy at RM154.5bil, but remained stable from December 2016. RHB Bank said that mortgages and small and medium enterprises financing continued to grow at an annualised growth rate of 13.1% and 6.3% respectively.
“Customer deposits increased by 5.3% to RM165.8bil yoy but remained largely unchanged from December 2016. Total current and savings account (CASA) registered a strong growth of 14.5% over the year, with CASA composition improving to 26.2% as at March 31, 2017 from 25.6% recorded in December 2016. The Group’s loan-to-deposit ratio remained healthy at 93.2%.
“Compared to the previous quarter, gross impaired loans declined slightly to RM3.7bil, with gross impaired loans ratio improving to 2.39% from 2.43% as at December 31, 2016,” the bank said.
Moving forward, RHB Bank said that it remains cautiously optimistic on the business environment and the development in both domestic and external markets. This is amid higher exports growth which is expected to lead to better consumer spending and private investment.
“Notwithstanding this, the Group continues to pursue growth responsibly while also effectively managing asset quality and enhancing productivity. We remain committed to our 2017 IGNITE Transformation strategies to drive performance improvements.
“We expect to deliver a better performance this year and are on track to achieve our long-term objectives,” said RHB Bank.
The bank did not declare any dividend for the first quarter.
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