CEO Morning Brief

RHB Bank's 3Q Earnings Drop 6.5% on Lower Net Fund Based Income

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Publish date: Tue, 28 Nov 2023, 08:38 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 27): RHB Bank Bhd's net profit declined 6.5% to RM649.95 million for the third quarter ended Sept 30, 2023 (3QFY2023), from RM695.41 million a year ago, mainly due to lower net fund based income.

Earnings per share fell to 15.16 sen for 3QFY2023, from 16.51 sen for 3QFY2022, the group showed in a stock exchange filing on Monday.

Net interest income dropped 17% to RM915.61 million for 3QFY2023, from RM1.10 billion for the previous corresponding quarter.

For the cumulative nine-month period ended Sept 30, 2023 (9MFY2023), RHB’s net profit grew 16% to RM2.22 billion from RM1.91 billion for 9MFY2022, despite net interest income falling by 14% to RM2.69 billion from RM3.12 billion previously.

RHB said the improvement in 9MFY2023 was mainly due to lower allowances for credit losses and higher non-fund based income.

Expected credit losses reduced 81.4% to RM71.4 million for 9MFY2023, primarily due to write-backs of management overlay, said RHB.

“Excluding write-backs, normalised credit cost stood at 0.24% (9MFY2023), compared with 0.35% for the same period last year,” it added.

The group’s gross loans grew 3.4% to RM219.4 million for 9MFY2023, mainly driven by mortgage, personal finance, auto finance, small and medium enterprises (SMEs) and Singapore.

Year-to-date customer deposits increased by 4.0% to RM236.1 million, mainly from growth in retail and SME deposits. Current account saving accounts made up 26.9% of total deposits, said RHB.

The cost-to-income ratio rose to 47.1% for 9MFY2023, versus 44.3% a year ago, amid higher personnel costs, which RHB attributed to collective agreement adjustments, coupled with higher establishment and marketing costs.

“Despite the headwinds, the group continued to uphold its strong financial performance in 3QFY2023, and consequently for 9MFY2023, as it navigated the challenging operating environment,” said group managing director and chief executive officer Mohd Rashid Mohamad.

“The group’s fundamentals remained strong, as reflected in the healthy capital and liquidity position. We will remain vigilant as risks from external factors, including recent developments in geopolitical tensions as well as challenges in certain markets where we operate, may dampen growth,” he said in a statement on Monday.

Mohd Rashid said RHB is on track to achieving its sustainable financial services target under the group’s five-year Sustainability Strategy and Roadmap.

“On a cumulative basis, we have attained over RM19 billion, equivalent to 99% of our RM20 billion target. We will be revising our sustainable financial services commitment upwards to ensure we continue to expand and maximise our impact in supporting our customers in their sustainability journey,” he said.

Shares in RHB were trading one sen or 0.2% higher at RM5.61 at Monday's noon market break, giving the group a market capitalisation of RM24.05 billion.

Source: TheEdge - 28 Nov 2023

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