KUALA LUMPUR: RHB Bank Bhd posted net profit of RM2.48bil in the financial year ended Dec 31,2019 (FY19), an increase of 7.7% year-on-year from RM2.30bil in FY18.
In its announcement to Bursa Malaysia on Thursday, it attributed the earnings growth mainly due to higher net income, lower expected credit losses (ECL) for loans and higher writeback of impairment losses for financial assets.
RHB Bank's revenue increased by 6.5% to RM13.53bil from RM12.69bil.
It raised its dividend payout to 18.50 a share in the fourth quarter FY19 compared with 13 sen a share.
Datuk Khairussaleh Ramli, group managing director of RHB Bank described the final dividend of 18.5 sen per share, which brought the total dividend to 31 sen per share and payout ratio for the year to 50.1%, as the highest ever dividend payout by the group.
Elaborating on the FY19 financial performance, RHB Bank said gross fund based income increased by 5.2% on the back of a 4.3% increase in gross loans and financing.
Funding and interest expense rose 9.2% year-on-year due to the impact from the overnight policy rate (OPR) hike in January 2018 and higher deposit base.
“As a result, net fund based income grew marginally by 0.4% to RM4.96bil from a year ago. NIM for the financial year was 2.12%, ” it said.
RHB Bank's non-fund based income rose significantly by 14.7% to RM2.14bil, contributed largely by higher net trading and investment income, higher insurance underwriting surplus and higher capital market related fee income.
Its operating expenses rose by 3.4% to RM3.47bil from a year ago driven by a rise in personnel costs, IT-related expenses and marketing costs.
“Nevertheless, with positive JAWS, cost-to-income (CIR) ratio continued to improve to 48.9% from 49.3% a year ago, ” it said.
RHB Bank said allowances for credit losses was RM278.5 million, 9.0% lower than the previous year, primarily due to lower ECL on loans and higher ECL writeback on other financial assets.
Full year credit cost improved to 0.18% compared with 0.19% over the same period last year.
RHB Bank said for the fourth quarter, net profit rose by 9.8% to RM621mil from RM565.42mil a year ago.
“This was mainly due to higher net fund based and non-fund based income and absence of one-off impairment on other non-financial assets, ” it said.
Its revenue increased by nearly 3.4% to RM3.42bil from RM3.31bil a year ago. Earnings per share were 15.49 sen compared with 14.10 sen.
Commenting on the financial performance, Khairussaleh said the group has delivered a strong performance in 2019 despite a challenging economic environment.
“Amidst market uncertainties, we are confident that our well-structured strategy, robust capital and liquidity levels as well as prudence in managing cost and asset quality will enable us to grow the business sustainably, ” it said.
On the outlook, Khairussaleh said RHB Bank expects 2020 business outlook to remain challenging.
“With the recent OPR cut and potentially further cuts, our net interest income would be adversely impacted. We are strengthening our efforts to mitigate any possible adverse effects to our asset quality.
“The implementation of our FIT22 five-year strategic roadmap, which was in its second year in 2019, continues to progress well and has resulted in steady growth across all our business segments. The SME segment remains a key focus for us and we will continue to provide better access and convenience to our customers, ” he said.
As for sustainable financing, he said RHB Bank has taken a leap by integrating environmental, social and governance (ESG) considerations into its risk management processes as well as lending, advisory and investment activities.
“We are committed to extend RM5bil by 2025, up from RM2.8bil as at Dec 31 2019, to support green activities through either lending, advisory and/or investments. We remain committed towards promoting and supporting sectors and activities that will contribute to sustainable development, ” he added.
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