KUALA LUMPUR: The challenging economic environment currently could only be a short-term volatility that Malaysia would be able to see through easily, thanks to the country’s strong fundamentals.
RHB Bank Bhd group managing director Datuk Khairussaleh Ramli said there is ample liquidity and the country’s banking system was also stellar.
Despite all the challenges that the banking sector may face amidst the coronavirus (Covid-19) outbreak, the protracting US-China trade war and the recent political uncertainty, he believed there are still opportunities.
“We believe our non-interest income will still be a main driver (of our earnings) and our fixed income portfolio is still strong in terms of potential gains.
“We think that quite a bit of things we have been doing such as for the affluent, SMEs and even the mid-cap markets will continue to provide some business for us, ” Khairussaleh told a media briefing on the group’s financial year 2019 (FY19) results yesterday.
He added that the bank is also monitoring its asset quality closely.
RHB Bank net profit for the fourth quarter ended Dec 31,2019 rose 9.83% year-on-year (y-o-y) from RM565.43mil to RM621.01mil on the back of a higher revenue which rose 3.37% y-o-y from RM3.31bil to RM3.42bil.
For the full financial year, RHB’s net profit jumped 7.69% y-o-y to RM2.48bil from RM2.31bil, mainly due to higher net fund based income and non-fund based, higher expected credit losses written back for other financial assets and the absence of the one-off impairment on other non-financial assets.
Its revenue grew 6.57% from RM12.69bil to RM13.53bil.
The group also declared a final dividend of 18.5 sen per share, bringing the full dividend for FY19 to 31 sen per share.
Khairussaleh said the dividend payout ratio of 50.1% was the highest ever declared by RHB.
The group has a dividend policy where the minimum dividend payout ratio is 30% of its net profit.
Khairussaleh said RHB has the capacity to maintain the dividend payout for FY20 if it can maintain its return on equity (RoE) of 10.5% and grow its loans by 5%.
“The industry will probably grow at 4% and for us, we think that mortgage will still be the strongest, maybe a high single digit growth.
“We’ve seen more and more mortgage borrowers coming from those purchasing houses priced RM500,000 and below, which is good and where the natural demand is.
“We’re also expecting a growth of slightly higher than 5% for the SME segment.
“For the corporate side, this is where we believe we’re going to face some challenges in growth, ” he said.
Commenting on the outlook of RHB’s Singapore operations, he said the bank still expected it to contribute as much as it did in total growth in FY19, with a high single digit growth.
While Singapore’s economy is expected to slow down, RHB said there was still some portion in the market share that it can win.
In Malaysia, the bank foresees another rate cut, largely depending on the Covid-19 impact and the global economic environment.
Khairussaleh said the recent slashing of 25 basis points (bps) by Bank Negara is expected to reduce RHB’s net interest income by 4 bps.
RHB’s share price rose 3 sen or 0.54% yesterday with 5.27 million shares traded.