RHB Capital’s 3Q earnings edge up 7.1% to RM376.4m

KUALA LUMPUR (Nov 29): RHB CAPITAL BHD [] recorded a 7.1% increase in its earnings to RM376.73 million from RM351.35 million a year ago on lower allowance for impairment on loans, financing and other losses which was reduced to RM29.64 million from RM174.25 million a year ago.

According to notes to its accounts on Tuesday, its earnings were also boosted by income from Islamic banking business at RM120.43 million compared with RM84.24 million a year ago.

RHB Capital’s revenue increased by 9.6% to RM1.761 billion from RM1.606 billion while earnings per share were 17.20 sen compared with 16.30 sen.

For the third quarter, the group recorded a profit before taxation of RM492.1 million, 6.8% lower as compared to RM528.2 million recorded in the quarter ended 30 June 2011.

“The lower profit before taxation was mainly due to lower other operating income by RM100.7 million, higher impairment losses on other assets by RM29.7 million, higher other operating expenses by RM28.3 million and lower net interest income by RM7.3 million, partly offset by lower allowance for impairment on loans, financing and other losses by RM92.3 million and higher income from Islamic Banking business by RM37.5 million,” it said.

For the nine-month period, its earnings rose 10.8% to RM1.153 billion from RM1.040 billion in the previous corresponding period while its revenue rose at a stronger pace of 16.7% to RM5.185 billion from RM4.441 billion.

Its profit before tax of RM1.532 billion was 11% higher versus the RM1.375 billion. The higher profit before taxation was mainly due to higher net interest income by RM144.4 million, lower allowance for impairment on loans, financing and other losses by RM117.7 million, higher income from Islamic banking business by RM50.2 million, higher other operating income by RM34.6 million and lower impairment losses on other assets by RM14.7 million. It was, however, partly offset by higher other operating expenses by RM204.8 million.

RHB Capital said annualised return on equity was at 14.6% and return on assets at 1.1%.

“Net interest income increased by 7.5% to RM2.1 billion on the back of strong loans growth of 13.0%. However, margins remained under pressure given the intensified competition on the pricing of both loans and deposits, as well as the impact of lower yield credit risk free public sector loans and financing on book,” it said.

RHB Capital also said margins were affected by several increases in Overnight Policy Rate (OPR) and Statutory Reserve Requirement (SRR) over the past 12 months.

The banking group said other operating income grew by 4.5% from previous year to RM798.3 million, mainly due to higher foreign exchange gains, service charges and fees, and brokerage income, partially offset by higher revaluation loss on derivatives which was undertaken to hedge the fixed rate loans and financing portfolio of the group.