RHB Bank 4Q net profit down 24% as provisions drag, declares second interim dividend of 25 sen

rhb bank 4q net profit down 24% as provisions drag, declares second interim dividend of 25 sen

RHB Bank 4Q net profit down 24% as provisions drag, declares second interim dividend of 25 sen

KUALA LUMPUR (Feb 27): RHB Bank, Malaysia’s fourth-largest bank by assets, said on Tuesday its net profit fell 24% in the fourth quarter from a year earlier due to lower net interest income and higher provisions.

Net profit for the three months ended Dec 31, 2023 was RM585.91 million compared to RM770.59 million over the same period last year, RHB said in an exchange filing. Net interest income slipped 17% year-on-year to RM867.22 million while non-interest income surged 26% to RM623.22 million. The company also booked RM230.12 million in allowance for credit losses on financial assets.

“We are cognisant of the external headwinds and the impact on the pace of economic recovery in the markets we operate,” said chief executive Mohd Rashid Mohamad. “Our fundamentals remained strong, as reflected by our strong capital and liquidity positions.”

The company declared a second interim dividend of 25 sen per share, bringing total dividend for FY2023 to 40 sen per share or a 61.1% payout.

For the full-year of 2023, net profit was 4.8% higher at RM2.81 billion verses RM2.68 billion in 2022. Net interest income was 15% lower at RM3.56 billion, hurt by higher funding costs mainly due to fixed deposit growth.

Non-interest income was up 16% to RM1.84 billion thanks to higher net gain on foreign exchange and derivatives, net trading and investment income and fee income. Allowance for credit losses was lower at RM301.53 million with writeback of management overlay and expected credit loss on other assets.

Net interest margin, a measure of profitability from lending, was 1.82%. Cost-to-income ratio was 47.5%. Gross loans and financing grew 4.8% while customer deposits increased 7.9%.

In terms of asset quality, gross impaired loans came in at 1.74% versus 1.55% in 2022 while loan loss coverage ratio with regulatory reserves improved to 106.2%.

“For the banking industry, demand for credit is expected to improve this year, led by stronger credit demand from the business segment,” RHB said. “Overall, the sector is anticipated to remain resilient, bolstered by robust capital and liquidity positions and conducive monetary policy.”

Shares of RHB Bank were 0.3% higher at midday trading break at RM5.67, valuing the bank at RM24.30 billion.

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