On 27 February 2018, RHB Bank Berhad announced its financial results for the financial year ended 31 December 2017. The Group reported a net profit of RM1,950.1 million compared with RM1,681.6 million recorded in 2016 or an increase of 16.0%. The improved performance was largely driven by higher net funding income, lower loan loss impairment and lower impairment losses on other assets, partially offset by higher overheads and lower non-fund based income.
Net fund based income rose by 5.4% to RM4,554.0 million year-on-year. This was mainly underpinned by growth in loans and prudent funding cost management particularly reflected in the healthy 18.8% CASA growth and replenishment of new sub-debts issuances at lower rates as well as redemption of a portion of senior notes during the year. The efforts brought about a stable NIM performance at 2.18% for the full year.
Non-fund based income declined 1.9% to record RM1,832.7 million from lower net gain on derivatives, commercial/investment banking fee income and insurance underwriting surplus. However, the impact was partly compensated by higher brokerage income in line with better trading volumes, higher Treasury trading and investment income, increase in net wealth management fee income and higher net foreign exchange gain.
Operating expenses were closely managed and rose by 2.9% to RM3,186.5 million from the previous financial year, attributed to higher personnel costs and IT-related expenses arising from investment in technology infrastructure and capabilities but a decline in office rental and related premises maintenance cost partially negated the impact. As a result, the Group’s effective cost management continued to deliver positive results, translating to cost-income ratio of 49.9% from 50.0% a year ago.
Allowances for impairment on loans and financing declined by 28.3% to RM426.8 million, primarily due to pre-emptive provisions for legacy steel related exposure provided in the previous year. This led to improvement in credit charge for the full year to 0.27%, compared with 0.39% recorded last year.
Malaysia’s 2018 real GDP is projected to grow at a healthy pace of 5.2% on the back of sustained strong growth in private consumption and private investments.
The Malaysian banking sector is expected to see a recovery in loans growth primarily from stronger demand for business loans. Capital market activities are also expected to pick up which would help support non-interest income of banks.