PETALING JAYA: RHB Bank
Bhd believes that loan growth is expected to accelerate in the second half of 2025 (2H25), notably to cushion for the shortfall in net interest margin as a result of the recent overnight policy rate (OPR) cut by Bank Negara Malaysia and the Singapore overnight rate average.
The lender, Malaysia’s fourth largest bank by asset size, forecast the country’s gross domestic product to expand by 4.2% year-on-year (y-o-y) this year on resilient domestic demand, with group managing director and chief executive Datuk Mohd Rashid Mohamad observing that Malaysia’s investment activity has remained robust, underpinned by sustained infrastructure development and strategic national frameworks.
At the unveiling of the group’s second quarter (2Q25) and 1H25 results, Mohd Rashid told a media conference that for banks, the optimism will translate into steady demand across retail lending, small and medium enterprise (SME) financing and corporate banking, with the electrical and electronics sector and consumer-related services remaining active.
Incidentally, RHB Bank saw 2Q25 net profit climb 11.2% y-o-y to RM803.5mil, as revenue also inched up 1.9% to RM4.5bil. For 1H25, the lender’s net profit increased by 7% y-o-y to RM1.55bil, underpinned by a stable turnover of RM8.89bil.
The group credited the stronger y-o-y showing up to June 2025 primarily to higher net fund-based income, disciplined credit cost management and improved credit quality, which it said reflected its strong fundamentals and prudent risk discipline.
It said total income expanded marginally at RM4.2bil, mainly from higher net fund-based income but partially offset with contraction in non-fund based income.
RHB Bank said it maintained operational stability, supported by prudent cost management, continued strength in capital and liquidity positions.
Cost growth was contained at 2.1% with cost-to-income ratio at 47.3%.
Meanwhile, compared to 1Q25, RHB Bank’s net profit improved by 7.1% from RM750mil, as revenue rose 2.7% from RM4.39bil, mainly due to higher non-fund based income, lower allowances for credit losses, better net funding income and reduced share of loss in associates, which were nevertheless partly offset by higher operating expenses and higher tax expense.
The group has declared a dividend of 15 sen per share for 2Q25.
Commenting on the bank’s firm performance so far in 2025, Mohd Rashid said while 1H25 has been marked by global uncertainties and industry headwinds, RHB Bank has remained resilient in delivering performance with sustained growth, lower expected credit loss, and disciplined cost management.
“Our domestic loan growth tracked well with the industry, supported by sound asset quality. These results underscore our strength and position us well to capture new growth avenues in the months ahead,” he pointed out.
He added that the lender will remain focused on sharpening the execution of its three-year strategic roadmap, PROGRESS27, with the recently concluded strategic bancassurance and bancatakaful partnerships reinforcing its commitment to staying relevant to customers, diversifying income streams, and driving sustainable long-term growth.
This is aligned to RHB Bank’s strategic priorities, enabling it to deliver broader value for stakeholders and strengthen its non-interest income base, said Mohd Rashid.
A deeper look at the group’s 1H25 results revealed that its net fund-based income increased 5.3% y-o-y to RM3bil, arising from a 5.9% y-o-y growth in gross loans, with Mohd Rashid noting that with liability management was at 1.88%.
Non-fund based income declined 10.8% y-o-y to RM1.2bil, primarily due to lower net gain on foreign exchange and derivatives, as well as brokerage income.
On an annualised basis, the group’s gross loans grew 3.1% to RM241bil, supported by 5.2% and 13.6% growth rates in its group community banking and commercial segments, respectively.
At the same time, domestic loans grew 4.2%, tracking well against the industry’s growth of 4.3%, although the group’s gross impaired loans (GIL) increased marginally to RM3.6bil, with a GIL ratio of 1.51%, from 1.47% in December 2024.
Reporting that domestic GIL ratio at 1.27% is lower than the industry’s GIL ratio of 1.42%, Mohd Rashid attributed the fractionally higher GIL to the commercial loan sector, which saw an uptake in the SME loan segment.
Loan loss coverage ratio for the group, including regulatory reserves, improved to 116.5%, and 77.5% without regulatory reserves, while annualised customer deposits grew 1.1% to RM251bil, with current account-savings account composition improving to 28.3% from the 27.6% of December 2024.
In a filing with Bursa Malaysia, the bank said the recent OPR cut is expected to have a mild impact on the sector’s net interest income, which should be cushioned by the reduction in Statutory Reserve Requirement ratio that has provided additional liquidity buffers.
Nevertheless, glancing ahead, Mohd Rashid projected the country’s economy to remain resilient, with strong domestic demand, growth in tourism activity, job creation, and sustained investment activity from both private and public sectors.
He added that the government’s Madani Economy framework is key to guiding sustainable and inclusive growth, emphasising high value activities, fiscal consolidation, and social equity.
“Initiatives such as the Energy Transition Roadmap and the New Industrial Master Plan 2030, alongside the steady rollout of structural reforms, are expected to further stimulate investment and economic growth.
“In this environment, the operating landscape remains conducive for the group to pursue its growth ambitions under PROGRESS27,” said Mohd Rashid.
