KUCHING: RHB Bank Bhd (RHB Bank) has reported a net profit of RM590.8 million for the first quarter ended March 31, 2018 (1QFY18), up 18.1 per cent year on year (y-o-y).
The improved performance was largely driven by higher net fund based and non-fund based income as well as lower allowance for expected credit losses.
Net fund based income increased by 13 per cent to RM1,234.9 million from a year ago.
Gross fund based income increased by 6.1 per cent arising from growth in loans and financing.
Funding and interest expense remained relatively flat throughout the year despite growth in total deposits, primarily due to better funding cost management, a healthy 14.3 per cent y-o-y current and savings account (CASA) growth and redemption of certain sub-debts and senior notes over the year.
These factors together with the positive impact from the overnight policy rate (OPR) hike in January 2018 have resulted in improved net interest margin (NIM) of 2.28 per cent for the first quarter.
Non-fund based income was 15.7 per cent higher at RM534.5 million, contributed largely by higher net foreign exchange gain and higher trading and investment income, partially offset by lower insurance underwriting surplus and lower brokerage income.
Operating expenses rose by 13.4 per cent y-o-y to RM863.0 million driven by a rise in personnel costs and IT-related expenses as the group continued to invest in technology infrastructure and capabilities. Nevertheless, cost to income ratio continued to show improvement to 48.8 per cent from 48.9 per cent a year ago.
On a quarter-on-quarter (q-o-q) basis, net profit grew 28.4 per cent to RM590.8 million from RM460.1 million recorded in the preceding quarter ended December 31, 2017.
This was primarily due to higher net fund based and non-fund based income and lower allowance for expected credit losses, partially offset by higher operating expenses.
Total assets of the group increased by 1.9 per cent from December 2017 to RM234.6 billion as at March 31, 2018.
Post implementation of MFRS9 (Financial Instruments), shareholders’ equity stood at RM22.4 billion, with net assets per share at RM5.57 from RM5.77 in December 2017.
In its outlook, RHB Bank revealed that Malaysia is expected to register a moderate gross domestic product (GDP) expansion of 5.2 per cent in 2018, against 5.9 per cent growth registered in 2017.
Growth is expected to be supported by resilient domestic demand, even as exports continue to expand and create positive spillover effects into consumer spending and private investments. Market and industry players will be keenly awaiting the economic policies of the new government, which are expected to boost consumer spending. It is anticipated that the private sector would play an increasing role in the economic growth.
This in turn is expected to have a positive effect on the banking sector which is further supported by healthy asset quality, strong capital position and ample liquidity. “The group continued its earnings growth momentum which is reflected in our improved performance even under challenging operating environment. The RM590.8 million profit recorded in the first quarter of 2018 is our best quarterly profit ever.
“We have established a clear vision of our place in the financial services industry, as articulated through our 5-year strategic plan FIT22, aimed at boosting performance, building scale and delivering service excellence.
“We target to grow our topline, especially from the key growth areas. This is on the back of improvements in fundamentals with our loan loss coverage exceeding 100 per cent, robust capital levels, healthy liquidity position and normalization of credit cost.
“One of our key priorities is to deliver value-add interactions and customized services based on differentiated segment through our digital transformation programme.
“We have adopted the AGILE way of working which will be a key driving force in growing our business and in the implementation of FIT22,” RHB Banking Group’s group managing director Dato’ Khairussaleh Ramli said.
Barring unforeseen circumstances, the group expects to achieve better performance in 2018.