KUALA LUMPUR: Bank Rakyat Group posted profit before taxation and zakat (PBTZ) of RM867.65mil in the first half ended June 30,2019 from RM735.46mil a year ago.
The country's largest Islamic cooperative bank said on Friday the higher profit was achieved despite the challenges on the group’s net profit margin from the reduction of Overnight Policy Rate (OPR) and weak consumer sentiments in the economy.
On the business front, the group continued to perform well with improvement in core operating income.
The higher profit was mainly contributed from financing and treasury activities, whilst containing its operating cost at the same time. Return on shareholders’ fund was 10%, among the highest in the industry.
For 1H 2019, Bank Rakyat sustained a low cost to income ratio (CIR) of 34.2%, outpacing the domestic banking industry’s average CIR of 45.0%.
With strong fundamentals and focus towards becoming a sustainable bank, the group successfully retained its position as the most profitable co-operative bank, as well as the second largest Islamic financial institution in Malaysia.
For 1H 2019, core operating income rose by 2.5% to RM3.29bil from RM3.21bill previously, of which mainly contributed by income from treasury activities.
Income from treasury activities grew by 5.2% to RM670mil due to prudent balance sheet management, focus on low risk, but stable investment.
Income from financing activities grew 1% to RM2.57bil from RM2.55bil previously, due to the moderate financing growth and intense competition in the market.
The group’s total assets grew 1.6% or RM1.70bil to RM108.17bil compared with RM106.47bil a year ago.
This was driven by soft growth in treasury assets of 0.6% or RM0.20 billion to RM34.06 billion in line with the regulatory requirement to hold sufficient level of High Quality Liquid Assets.
Return on assets (ROA) improved from 1.4% opreviously to 1.6%, which was on par with the domestic banking industry’s ROA of 1.6%.
For 1H 2019, the gross financing balance increased by1.9% to RM71.22bil from RM69.92bil previously.
Despite the intense competition, the group’s gross financing continued to grow in the targeted segments including residential financing as well as car financing.
Residential financing grew by 11.2% or RM590mil to RM5.84bil compared with RM5.25bill previously. Car financing grew 9% or RM240mil to RM2.91bil, compared to RM2.67bil previously.
Business financing, especially the cooperative segment grew by 8.8% or RM180mil to RM2.22bil, compared to RM2.04bil previously.
As part of diversification on other portfolios, personal financing balance stood at RM55.40bil, grew at slower pace of 0.6% or RM340mil, in line with the group’s long-term strategy to reduce overall dependency on personal financing.
Bank Rakyat's financing loss coverage continued to remain high at 126.35% (June 2018: 109.02%), which ws above the domestic industry’s average of 91.1%.
Its assets quality recorded an improved gross impaired financing ratio of 2.1% versus 2.4% previously.
The group’s deposits stood at RM83.39bil as at end-June 2019, compared with RM84.05bil previously, which was a slight decline in line with the softening of overall industry’s financing growth.
The current account and savings account (CASA) balances improved significantly at 13.1% or RM740mil to RM6.43bil in 1H 2019, in tandem with the strategy to increase its CASA.