RHB Capital Bhd today reported a pre-tax profit of RM1.631 billion (9M FY2014: RM2.091 billion) and net profit of RM1.195 billion (9M FY2014: RM1.552 billion), respectively for the first nine months of 2015.
Excluding its one-off Career Transition Scheme (CTS) expenses of RM308.8 million, the group’s normalized pre-tax profit was at RM1.940 billion or 7.2% lower year-on-year (y-o-y) (9M FY2014: RM2.091 billion).
“This was mainly attributed to lower investment banking related fee income and lower trading income and higher operating expenses,” RHB Capital pointed out in a media release. “The lower impairment written back on other assets was offset by lower loan impairment charges during the period.”
The group’s net profit before the one-off CTS was at RM1.427 billion, a decrease of 8.0% from previous corresponding period (9M FY2014: RM1.552 billion).
For the first nine months of the year, RHB Capital’s net fund based income grew by 1.6% to RM3.004 billion. Its gross fund based income increased by 10.8% on the back of 10.0% increase in gross loans and financing. Funding and interest expense, however, was higher by 18.5% mainly due to higher customer deposit and higher funding expense on sukuk and sub-debts totaling RM1.5 billion and US$300 million senior unsecured notes issued during 2H 2014.
“Non-fund based income was lower by 6.0% at RM1.505 billion,” noted RHB Capital. “This was mainly due to lower trading income and investment banking related fee income, partly offset by higher foreign exchange gain and increase in wealth management fee income.”
Excluding the one off CTS expenses, other operating expenses rose by 4.1%, a reflection of a strong cost discipline across the group. The group has completed its CTS in Malaysia with a total of 1,812 applications accepted and payout amounting to RM308.8 million.
Allowance for impairment on loans and financing for the period decreased by RM60.0 million to RM105.8 million. This was primarily due to lower collective allowance and lower bad debts written off, partially offset by higher individual allowance and lower impaired loans and financing recovered.
Impairment losses written back on other assets was lower at RM59.4 million due to the absence of a large one off recovery in 2014.
On a quarterly basis, RHB Capital’s normalized pre-tax profit for 3Q FY2015 was at RM603.1 million, 18.7% lower as compared to RM692.4 million recorded in the preceding quarter ended June 30 this year.
“This was mainly due to higher impairment on loans and financing, lower non-fund based income and higher operating expenses, partly offset by higher net interest and fund based income,” rationalized RHB Capital.
All-in, the group’s total assets rose by 4.7% or RM10.2 billion to RM229.6 billion as of September 30 this year while shareholders’ funds stood at RM20.5 billion. Net assets per share improved to RM7.94 compared to RM7.31 as of December 31, 2014.
Elsewhere, the group’s gross loans and financing grew by 5.0% for the first nine months of 2015, and 10.0% year-on-year to RM149.6 billion. Excluding one large corporate repayment during the period, gross loans growth was at 6.5% for the first nine months of the year.
“The growth was broad-based, predominantly from purchase of residential and non-residential properties, construction and working capital,” justified RHB Capital. “The group’s domestic loan market share stood at 9.4% as of September 30 this year.”
As the group continue to rebalance its liquidity and funding position, customer deposits grew by a marginal 1.2% for the first nine months of the year and expanded by 7.3% y-o-y to RM159.0 billion. However, current and savings account (CASA) balances registered a strong growth of 8.6% and CASA composition improved to 23.3% as of September 30 this year from 21.7% in December 2014.
Asset quality continue to improve where gross impaired loans ratio decreased to 1.94% from 2.03% in December 2014.
Moving forward, Datuk Khairussaleh Ramli, Group Managing Director of RHB Banking Group, deemed the group’s overall performance as satisfactory on the back of challenges in the economic and business environment, especially for investment banking activities.
“The completion of the CTS will create a leaner organization with enhanced efficiency,” he explained. “We are confident that the completion of the proposed rights issue and internal re-organization which is expected to be completed by 1Q 2016 will position the group on a strong footing for growth and profitability.”
At 4.18pm, RHB Capital was up 4 sen to RM5.52 with 2,109,500 shares traded.
jenniferwlacombe 