RHB sees 35% hit to net profit from one-off net modification loss

PETALING JAYA: RHB Bank Bhd saw its net profit decline 34.9% to RM400.77 million in its second quarter ended June 30, 2020 from RM615.41 million reported in the corresponding period of the previous year attributed to a one-off net modification loss relating to the loan moratorium and high allowances for credit losses.

Revenue for the period stood at RM3.27 million, a 4.2% fall from RM3.42 billion reported previously.

According to the group’s Bursa disclosure, its group retail banking operations saw a pre-tax profit of RM477.5 million in the first six month of the year ended June 30, 2020, 10% lower than the previous year’s corresponding period due to higher allowances for credit losses on loans and lower non-fund based income, partially offset by higher net fund based income and lower operating expenses.

Its group business banking segment pre-tax profit saw a 33.6% decline year-on-year (yoy) to RM170.7 million for the period mainly due to higher allowances for credit losses on loans and lower non-fund based income, partly offset by higher net fund based income and lower operating expenses.

Meanwhile, RHB’s group corporate & investment banking operations reported a 17.4% yoy improvement in pre-tax profit to RM336.3 million, a 17.4% on the back of higher net income, lower operating expenses and lower expected credit losses on loans, partially offset by higher impairment losses on other financial assets.

Its overseas operations, RHB Bank Singapore posted a 39% yoy higher pre-tax profit of SG$8.8 million attributed to higher non-fund based income and lower operating expenses, partially offset by higher expected credit losses on loans and other financial assets and lower net fund based income.

On the whole the group’s gross loans and financing grew by 4.9% yoy in 1H’20 to RM180.8 billion, mainly supported by growth in mortgages, SME and Singapore operations, while its domestic loans and financing grew 3.4% year-on-year.

Its customer deposits increased by 7.8% yoy to RM199.4 billion, largely attributed to growth in CASA and fixed deposits with its liquidity coverage ratio (LCR) remained healthy at 141.5%.

RHB group managing director Datuk Khairussaleh Ramli (pix) noted that the bank is not spared from the effects of the pandemic but remains committed to assist its customers, absorbing the net modification loss arising from the implementation of the loan repayment moratorium in the first half of 2020.

“The outlook remains challenging but in the medium term, we remain steadfast in driving our FIT22 five-year strategy, making the necessary adjustments to our key initiatives to meet the changing customer behaviour and respond to the demands brought about by Covid-19,” he said in a press release.

“We are confident that we will be able to navigate the group through these unprecedented economic challenges,”

Khairussaleh also stated that 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.

In the first half of the year ended June 30, 2020, the group posted a net profit of RM971.65 million, a 22% decline from RM1.25 billion reported previously in the first half of the previous year.

Meanwhile, its revenue saw a 3.9% reduction to RM6.50 billion from RM6.77 billion reported previously.

source https://www.thesundaily.my/business/rhb-sees-35-hit-to-net-profit-from-one-off-net-modification-loss-HY3717922