KUALA LUMPUR: RHB Bank Bhd posted net profit of RM622.25mil in the third quarter ended Sept 30,2020, which was 1% higher than the RM615.83mil a year ago due to other higher operating income.
Its revenue however fell by 10% to RM3bil from RM3.33bil a year ago. Its earnings per share were lower at RM15.52 sen compared with 15.36 sen.
“The group’s profit before tax excluding discontinued operations dropped 6.4% year-on-year to RM789.9mil in 3Q mainly due to higher allowances for credit losses on loans and other financial assets, and operating expenses, offset by higher non-fund based income, ” it said.
For the nine months, its net profit declined by 14.4% to RM1.59bil from RM1.86bil in the previous corresponding period mainly due to net modification loss of RM392.4mil arising from the moratorium given to our customers and higher allowances for credit losses.
However, higher net fund-based income and non-fund based income helped to mitigate the profit reduction. RHB Bank said its revenue fell by 5.8% to RM9.51bil from RM10.10bil.
RHB Bank said its net fund based income increased by 1.7% year-on-year to RM3.73bil driven by proactive management of funding costs, which dropped 19.3% year-on-year.
This was supported by an increase in current account/savings account composition from 25.4% to 31.3% and the redemption of certain Hybrid Tier-1 Capital and sub-debt instruments over the course of 2019 and 2020.
“Net interest margin (NIM) for the quarter dropped to 1.99% compared with 2.13% for the same period last year mainly from the impact of OPR cuts, ” it said.
RHB Bank said its non-fund based income improved by 14.3% to RM1.77bil, contributed largely by higher net trading and investment income, brokerage income and insurance underwriting surplus.
Operating expenses increased slightly by 0.4% to RM2,497.3 million from a year ago mainly attributed to higher personnel cost and IT expenses.
Cost-to-income ratio was at 48.8% from 47.6% recorded a year ago, contributed largely by the one-off net modification loss.
“The group remained prudent and continued to build up provisions to absorb any potential negative effects to asset quality as the extent of the pandemic impact is still uncertain especially with the resurgence in cases recently.
“As a result, allowances for credit losses on loans, advances and financing increased to RM525.9mil, up from RM238.8mil for the corresponding period last year. Annualised credit charge ratio was at 0.38% compared with 0.18% over the same period last year, ” it said.
Elaborating on the financial balance sheet and capital position, RHB Bank said total assets rose by 2.1% from December 2019 to RM263bil as at Sept 30.
Net assets per share was at RM6.81, with shareholders’ equity at RM27.3bil as at Sept 30.
Its Common Equity Tier-1 (CET-1) and total capital ratio of the Group stood at 16.42% and 18.25% respectively.
It also said the group’s gross loans and financing grew by 5.6% year-on-year to RM182.4bil, mainly supported by growth in mortgages, SME and Singapore.
Gross impaired loans was RM3.1bil as at Sept 30 with a gross impaired loans ratio of 1.69% compared with RM3.5bil and 1.97% as at Dec 31,2019.
Loan loss coverage ratio for the Group, excluding regulatory reserves, stood at 108.3% as at end-September 2020.
Datuk Khairussaleh Ramli, group managing director of RHB Banking Group said:
“Despite the recent resurgence in COVID-19 cases, there seem to be early indicators pointing to global economic recovery, but the trajectory remains highly uncertain at this juncture.
“The group therefore remains vigilant and continue to navigate carefully through the impacts of the pandemic and bolster our provisions to tide through uncertainties ahead.
“While our liquidity and capital positions remain solid, it is important that we continue to strengthen these areas.
“We remain committed in providing targeted repayment assistance to our customers in weathering the effects of economic challenges brought about by the COVID-19 pandemic.”
Khairussaleh said RHB Bank had made its Repayment Assistance programme even easier for customers to obtain the needed financial assistance, in particular those registered under the Bantuan Sara Hidup and Bantuan Prihatin Nasional packages as well as the microenterprise segments with loan and financing facilities of up to RM150,000.
He urged all RHB Bank customers who have difficulty in paying their loan and financing instalments to contact the bank as soon as possible.
“As we navigate through the financial, operational and humanitarian impact of COVID-19 pandemic, we remain steadfast in our commitment to emerge from this crisis stronger - accelerating digital transformation and IT infrastructure modernization, developing and upskilling our workforce, and implementing Agile@Scale, ” he said.