PETALING JAYA: RHB Bank Bhd does not expect another overnight policy rate (OPR) cut this year, and says it sees signs of business recovery.
Group managing director Datuk Khairussaleh Ramli (pic) said RHB Bank had forecast a smaller economic contraction for the third quarter, followed by positive growth in the fourth quarter.
“In certain business segments, especially in retail, we do see improvement in terms of applications coming. We believe this can be attributed to government incentives in the home ownership front and purchase of auto vehicles.
“We are seeing some green shoots in the businesses that we support. We think there is no reason to reduce the OPR for now, ” he told journalists via a video conference.
On the outlook for the rest of 2020, he said net interest margin (NIM) is expected to drop to 1.96%, from 2.12% last year – excluding additional rate cuts.
The group is maintaining its loan growth target of 2% to 3%.
He said industry loan is expected to grow by 3.5% this year, as business recovery momentum has picked up since June.
For the second quarter ended 30 June, 2020, the group’s net profit dropped 34.9% year-on-year to RM400.8mil, while revenue was 4.2% lower at RM3.27bil.
The group said this was mainly due to a one-off net modification loss of RM392.4mil in relation to the loan repayment moratorium accorded to customers and higher allowances for credit losses.
The impact came primarily from hire-purchase and personal financing portfolios.
However, higher net fund-based income and non-fund-based income, coupled with lower operating expenses, helped mitigate the profit reduction.
NIM for the quarter dropped to 2.05%, compared with 2.09% a year ago. No dividend was declared. Khairussaleh said the group is taking a more conservative stance to preserve capital and sustain lending.
“We will revisit this (dividends) at year-end when there is better business visibility.
“We continue to exercise prudence by building up provisions in anticipation of a potential weakening of asset quality. Nevertheless, the group’s healthy liquidity position and strong capital base will help us cushion the adverse impact caused by the pandemic, ” he said.
Khairussaleh pointed out that with the blanket moratorium ending in September, the group is ramping up efforts to reach out to customers who need financial or repayment assistance, such as those who have lost their jobs or had their income reduced.