Highlight RHB Cap 1Q profit rises 26% yoy on loan growth, higher income, plunge in impairment provision

by **Cals** Tue 27 May 2014, 00:42

Highlight RHB Cap 1Q profit rises 26% yoy on loan growth, higher income, plunge in impairment provision

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Monday, 26 May 2014 13:43

KUALA LUMPUR (May 26): RHB Capital Bhd reported a first quarter net profit of RM450.7million, up 26.2% from a year ago, after registering loan expansion, higher income and reversal of a loan impairment.

Total revenue for the banking and financial group rose to RM2.40 billion for the first quarter to March 31, 2014,, up from RM2.27 billion in the first quarter of last year.

In a statement, RHB Capital said: “Healthy business momentum supported by sustained loan expansion and stable margin resulted in higher net interest income, and stronger contribution from customer-related transactions and activities boosted non-interest income.

“Significant improvement in the loan impairment charges further contributed to the stronger first quarter performance.”

RHB Capital said net interest income increased by 5.1% to RM818.9 million on the back of 3.7% and 11.2% growth in loans and advances from the previous quarter and year respectively. And net interest margin stabilised at 2.33%.

Other operating income recorded 10.7% growth to RM497.7 million, largely driven by higher fee income and increase in insurance underwriting surplus.

Fee income increased by 17% to reach RM322.7 million, mainly attributed to higher service charges and fees, guarantee fees and fund management fees.

The group’s other operating income to total income ratio improved to 33.9% from 33.0% recorded a year ago.

Islamic Banking income increased by 13.5% to RM151.7 million.

On the flip side, the statement said into year two of post-merger, the RHB-OSK franchise realised synergies totalled RM48 million, accounting for only 43% of year two synergies target of RM112 million.

And operating expenses rose 9.9% to RM788.6 million largely attributed to a 13.3% increase in staff-related costs.

However, allowance for impairment on loans and financing for the quarter decreased significantly to RM54.2 million from RM154.9 million recorded in the same period last year, primarily due to the non-recurrence of an impairment made on a corporate account last year, and higher bad debts recovered during the period.

Looking at its balance sheet and asset quality, RHB Cap said total assets expanded by 3.1% to RM196.9 billion as at 31 March 2014, mainly due to growth in net loans and cash and short term funds.

Loans growth gained 3.7% quarter-on-quarter increase and 11.2% growth year-on-year to reach RM126.3 billion.

“The growth was broad-based across different segments with significant increase in residential property, purchase of securities, other purposes and working capital. Domestic market share improved to 9.4% as at 31 March 2014 from 9.3% in December 2013.”

RHB Cap said asset quality continued to be strong with impaired loans ratio at 2.54%, compared to 2.81% in December 2013. Absolute gross impaired loans decreased 6.3% over the first three months to RM3.2 billion.

On prospects for the year, RHB Capital’s managing director Kellee Kam said in the statement: “Barring unforeseen circumstances, we expect 2014 performance to be better than 2013.”