PETALING JAYA: RHB Bank Bhd, which saw lower earnings for the first six months this year (H1’22), expects slower loan growth in H2’22 amid high inflation and interest rate environment.
However, group managing director and CEO Mohd Rashid Mohamad (pix) said the bank is at a 3.2% loan growth rate now and it is confident of achieving the 4.5% target it set for the year.
“Our view is that the high inflation and interest rates expected for this year could impact our loan growth but the impact will not be substantial,” he told a virtual press conference after announcing its H1’22 financial results today.
Mohd Rashid stated that its loan growth drivers will still be the mortgage, auto finance, small and medium enterprise (SME), and Singapore segments.
According to RHB’s repayment assistance programme data, 91% of borrowers have resumed their monthly instalment payments; however, it did see an uptrend in gross impaired loans (GIL) among micro SME which it is closely monitoring.
“Yes, maybe an uptick in provisions is possible, but we are quite confident that we would be able to maintain the GIL ratio below 1.7% for the entire year, looking at our asset quality,” he said.
RHB’s SME loans grew 5.5% to RM25.8 billion while SME deposits increased 8.1% to RM30.3 billion from December 2021. The total number of SME customers was 2.1% lower at 207,314.
For the second quarter ended June 30, 2022, RHB’s net profit fell 9.5% to RM634.83 million from RM701.34 million a year ago mainly due to lower non-fund-based income and higher operating expenses. Revenue for the quarter was marginally higher at RM2.99 billion compared with RM2.93 billion in last year’s corresponding quarter.
RHB’s net fund-based income grew 9.1% year-on-year (y-o-y) to RM1.56 billion from higher gross fund-based income. Non-fund-based income decreased 33.1% y-o-y to RM383.5 million due to lower fee income, insurance underwriting surplus, and net trading and investment income. Total income declined 3.0% y-o-y to RM1.95 billion.
Net profit for H1’22 fell 8.62% to RM1.24 billion from RM1.35 billion last year. Revenue was flat at RM5.84 billion compared with RM5.83 billion in last year’s corresponding half.
In H1’22, its net fund-based income grew 6.5% y-o-y from higher gross fund-based income. Non-fund-based income declined 26.9% y-o-y to RM816.2 million due to lower fee income and net trading and investment income. Its total income fell 2.0% to RM3.85 billion y-o-y.
RHB declared an interim dividend of 15 sen per share, consisting of a cash payout of 10 sen per share and an electable portion under the dividend reinvestment plan of five sen per share. This is equivalent to a payout ratio of 51.2%. RHB has a dividend payout ratio policy of 30% of its net profit.
RHB’s return on equity (ROE) came in at 9.1% y-o-y from 10.0% last year. For the full year, the bank has targeted an ROE of 8.5% which has also taken into account the one-off Cukai Makmur.
On its overseas business, RHB Singapore’s total loans grew to S$6.86 billion, of which S$3.02 billion were corporate loans and S$2.43 billion commercial/SME loans. RHB Cambodia’s total loans expanded to US$680 million, of which US$225 million were retail loans and US$126 million SME loans.
The bank has achieved a cumulative RM11 billion in sustainable financial services as of June 30, 2022.
With lingering headwinds expected to continue into H2’22, Mohd Rashid said RHB will maintain its prudent stance and continuously monitor its asset quality closely.