RHB Bank's net profit up 9.4% to US$234m in 1H17

Thanks to lower impairment losses on other assets.

RHB Bank Berhad announced its financial results for the half year ended 30 June 2017. The Group reported a net profit of RM1,001.2 million (US$234m) as compared to RM915.1 million for the same period in 2016, an increase of 9.4%. The year-on-year earnings improvement was mainly due to lower impairment losses on other assets and higher net funding income, partially offset by lower non-fund based income, higher overheads and higher loan loss impairment.

Net fund based income increased by 3.3% to RM2,239.6 million from a year ago due mainly to loans growth and lower interest expense from prudent funding cost management and redemption of sub-debts and senior notes in the second quarter of the period. This has improved net interest margin for the quarter, rising to 2.19% from 2.17% in the preceding quarter.

Non-fund based income was 7.1% lower at RM895.1 million, contributed largely by lower net foreign exchange gain, lower insurance underwriting surplus and lower commercial/investment banking fee income, partially offset by an increase in net wealth management fee income and higher brokerage income in line with better trading volumes.

Operating expenses rose by 1.9% to RM1,545.5 million from a year ago driven by a rise in personnel costs and higher IT-related expenses as the Group continued to invest into technology infrastructure and capabilities. This was offset by a decline in office rental and related premises maintenance cost. The Group’s disciplined cost management efforts delivered an improved cost to income ratio at 49.3%, from 50% for financial year 2016.

Allowances for impairment on loans and financing was higher at RM165.3 million, primarily due to higher collective impairment on the back of loans growth and lower loans and financing recovered. Total credit costs for first half 2017 was at 21 basis points compared to 18 basis points a year ago.

Impairment losses on other assets for both years were primarily provided for corporate bonds in Singapore, reflecting market developments in the oil and gas industry.