Group managing director and CEO Rashid Mohamad acknowledged that pressure from high inflation and rising interest rates could adversely affect the bank’s loan growth but insisted that the impact would not be substantial.
“The bank is on track to achieve the target set at the start of the year. We are confident that we can achieve it by end-2022,” he said during a media briefing on RHB’s second quarter financial results today.
Rashid also expressed confidence that RHB will be able to maintain its asset quality and keep its gross impaired loan (GIL) to below 1.7% for the entire year despite an uptrend already evident among micro, small and medium enterprises.
Its repayment assistance data revealed 91% of its customers have resumed their monthly instalment payments.
Rashid said RHB also expects another 25-basis-point (bps) increase in the overnight policy rate (OPR) when the monetary policy meeting is held next, with the possibility of an additional 25 bps hike later in the year depending on the emerging data.
“We need to look at how inflation pans out vis-a-vis growth as well as the developments in the global environment,” he said.
For 2022, the bank has targeted returns on equity of 8.5%, which includes the impact of the one-off “cukai makmur” (prosperity tax), which translates into a normalised return of 10%.
With regards to deposits, the bank stated that it has targeted payroll accounts to bolster its cost composition.
Apart from that it will also examine how each of its strategic banking groups (SBG) can improve their cost composition.
For instance, RHB will launch its new mobile and internet features that are expected to improve deposit experience for its customers.
“I believe net fund-based income will continue to grow with the OPR in the coming months. This will be the main income for financial institutions,” said the managing director.
For the second quarter ended June 30, the bank’s net profit fell 9.5% to RM634.83 million from RM701.34 million a year ago, mainly due to lower non-fund based income and higher operating expenses. Meanwhile, its revenue remained relatively flat at RM2.99 billion compared to RM2.93 billion reported previously.
In the first half of 2022, its net profit decreased 8.62% to RM1.24 billion from RM1.35 billion last year. Revenue for the period came in marginally higher at RM5.84 billion compared to RM5.83 billion, previously.