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RETAIL BANKING | Staff Reporter, Malaysia

RHB's net profit climbed 18.2% to $570m in 2018

Earnings were boosted by net fund based income which hit $1.2b.

RHB Bank Berhad enjoyed a better year in 2018 as net profit rose 18.2% YoY to $570m (MYR2.31b), an announcement revealed.

The firm attributed the better net profits to increase in net fund based income which grew 8.5% YoY to $1.21b (MYR4.94b). Moreover, the growth in non-fund based income by 1.8% to $460m (MYR1.86b) contributed largely by higher net foreign exchange gain and trading and investment income.

RHB saw its gross fund based income inch up 7.8% in 2018 on the back of a 5.5% increase in
gross loans and financing, whilst funding and interest expense rose 7.3% YoY. The firm also recorded a higher NIM of 2.24% in 2018 from 2.18% in 2017 thanks to loan growth and continued prudence in the management of funding cost.

The firm’s retail banking business saw a 4.4% increase in pre-tax profit to $250m (MYR1.2b) amidst higher net fund based income and non-fund based income. As of end December, the bank’s retail loans and financing rose 11.1% to $20.77b (MYR84.6b) buoyed by growth in mortgages (14%) and personal financing.

Meanwhile, Group Business Banking saw a marginal increase of 1.3% YoY increase in pre-tax profit to $97.63m (MYR397.7m) on the back of higher net fund based income. Gross loans and financing expanded 5.7% to $6.21b (MYR25.3b) driven primarily by Retail SME portfolio.

RHB’s Group Wholesale Banking recorded a pre-tax profit of $440m (MYR1.8b), an increase of
2.7% from 2017. Its. However, gross loans and financing slipped 3.8% YoY to $10.70b (MYR43.6b) dragged by several large corporate repayments.

The firm’s Singapore unit rebounded from a pre-tax loss of $102.3m to a pre-tax profit of $42m thanks to lower expected credit losses as substantial allowances were provided for corporate bonds and loans in the oil and gas industry in the previous financial year. Moreover, Singapore loans and advances rose 3.3% to $960m (S$3.9b) whilst customer deposits declined 11.7 YoY% to $1.08b (S$4.4b).

For the bank’s Islamic business, pre-tax profit climbed 20.7% YoY to $142.19m (MYR579.2m) amidst higher net fund based and non-fund based income. Gross financing jumped 21.6% YoY to $12.84b (MYR52.3b).

"We will continue to invest in technology infrastructure and digital capabilities and promote the culture of an AGILE way of working to enhance our competitive edge, improve operational efficiency and serve our customers better. In the first year since the launch of our five-year strategy, FIT22, we have gained positive traction," said Dato’ Khairussaleh Ramli, group managing director of RHB Banking Group. "Nevertheless, we remain cautious of the continued challenging global economic environment.”

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