RHB Bank group managing director Datuk Khairussaleh Ramli: "In the first year since the launch of our five-year strategy, FIT22, we have gained positive traction. Nevertheless, we remain cautious of the continued challenging global economic environment."
KUALA LUMPUR: RHB Bank Bhd posted a record net profit of RM2.31bil in the financial year ended Dec 31, 2018 underpinned by higher net fund based income and lower allowances for credit losses on loans.
The banking group said on Wednesday its net profit rose 18.2% from the RM1.95bil in FY17. Its revenue increased by 6.9% to RM12.69bil from RM11.87bil.
Commenting on FY18 results, RHB Bank said the stronger earnings were due to an increase in net fund based income by 8.5% to RM4.94bil from a year ago.
Gross fund based income increased by 7.8% on the back of a 5.5% increase in gross loans and financing, whilst funding and interest expense rose 7.3% year-on-year.
It also posted higher net interest margin (NIM) of 2.24% versus 2.18% in 2017 supported by growth in loans and continued prudence in the management of funding cost.
The banking group's non-fund based income grew by 1.8% to RM1.86bil, contributed largely by higher net foreign exchange gain and trading and investment income.
RHB Bank said its operating expenses increased by 5.4% to RM3.36bil on-year. The factors were a rise in personnel costs and IT-related expenses as the group continued to invest in technology infrastructure and digital capabilities. Cost-to-income (CIR) ratio improved to 49.3% from 49.9% a year ago.
“Allowances for credit losses on loans was RM322.4mil, 22.8% lower on-year primarily due to certain recoveries recorded in the current period, coupled with substantial impairment provided for oil and gas related companies in the corresponding period,” it said.
In the fourth quarter, its net profit rose at a faster pace of 22.9% to RM564,42mil from RM460.07mil. This was due to higher net fund based income and lower allowances for credit losses on loans and other assets.
Revenue increased by 7.6% to RM3.31bil from RM3.07bil. Earnings per share were 14.10 sen compared with 11.47 sen. It announced a higher dividend per share of 13 sen compared with 10 sen a year ago.
On the outlook for 2019, its group managing director Datuk Khairussaleh Ramli said Malaysia's economy was expected to grow by 4.6% in 2019. Private sector activity will continue to be the primary driver of growth while a recovery in the commodity output is anticipated to support export growth.
“For the banking sector, loans is expected to grow between 5% and 5.5%, supported both by the consumer and business segments.
“We are pleased to have delivered a good set of performance in 2018, improving our ROE in excess of 10%. Our fundamentals are strong with high capital ratios, healthy liquidity position and adequate coverage for loan losses.
“We will continue to invest in technology infrastructure and digital capabilities and promote the culture of an AGILE way of working to enhance our competitive edge, improve operational efficiency and serve our customers better.
"In the first year since the launch of our five-year strategy, FIT22, we have gained positive traction. Nevertheless, we remain cautious of the continued challenging global economic environment,” he said.
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