KUALA LUMPUR, Aug 28 ― RHB Bank Bhd’s net profit dropped 34.9 per cent to RM400 million for the second quarter ended June 30, 2020 compared with RM615.41 million a year ago, mainly due to the one-off net modification loss of RM392.4 million and higher allowances for credit losses on loans, advances and financing.
Revenue for the quarter under review declined to RM3.2 billion versus RM3.41 billion before.
In March this year, the Group granted an automatic repayment moratorium for loans and financing to individual and small and medium enterprise (SME) customers, and an option to opt-in for the repayment moratorium to other customers to cushion the impact of the Covid-19 pandemic.
“As a result, we have recognised a net loss of RM392.4 million arising from the modification of cashflows of these loans and financing in the second quarter of the financial year 2020. The impact came primarily from hire purchase and personal financing portfolios,” it said in a statement here, today.
The Group has taken a prudent stance of not declaring any interim dividend but will revisit this at year-end when there is better visibility on the impact and outlook, it said.
For the first half-year, net profit stood at RM971 million compared with RM1.2 billion previously, while revenue was also lower at RM6.5 billion versus RM6.76 billion before.
“While the extent of the impact of the Covid-19 pandemic remains uncertain, the Group has taken proactive steps to build up provisions to absorb any potential negative effects on asset quality,” it said.
As a result, allowances for credit losses on loans, advances and financing increased to RM359 million, up from RM168.2 million for the corresponding period last year. Annualised credit charge ratio was at 0.40 per cent compared with 0.20 per cent over the same period last year.
RHB said its capital position remains strong; Common Equity Tier-1 (CET-1) and the total capital ratio of the Group stood at 16.59 per cent and 18.55 per cent, respectively.
“The Group’s gross loans and financing grew by 4.9 per cent year-on-year to RM180.8 billion, mainly supported by growth in mortgages, SMEs and Singapore. Domestic loans and financing grew by 3.4 per cent year-on-year. The Group’s domestic loan market share stood at 9.0 per cent as at end-June 2020.”
Gross impaired loans were RM3.4 billion as at June 30, 2020, with a gross impaired loans ratio of 1.87 per cent compared with RM3.5 billion and 1.97 per cent as of Dec 31, 2019. Loan loss coverage ratio for the Group, including regulatory reserves, stood at 107.7 per cent as at end-June 2020.
Customer deposits increased by 7.8 per cent year-on-year to RM199.4 billion, largely attributed to growth in CASA and fixed deposits. CASA increased by 15.8 per cent year-on-year, with CASA composition at 28.6 per cent as of June 30, 2020. Liquidity coverage ratio (LCR) remained healthy at 141.5 per cent.
The outlook remains challenging but in the medium term, the Group stays steadfast in driving its FIT22 five-year strategy, making the necessary adjustments to its key initiatives to meet the changing customer behaviour and respond to the demands brought about by Covid-19.
The bank is confident of navigating through these unprecedented economic challenges, it said. ― Bernama
