RHB Capital Bhd, the best performer on Malaysia's benchmark equity index this year, expects record earnings for 2010 and 2011 as lending accelerates and the company expands in overseas markets.

Profit at Malaysia's fourth-largest banking group may climb to RM1.4 billion (US$453 million) this year from RM1.2 billion in 2009, managing director Tajuddin Atan said in an interview yesterday in Kuala Lumpur. Profit is expected to keep rising in 2011, he said.

RHB's loan growth may exceed 15 per cent this year, almost double the industry pace, Tajuddin said. The Kuala Lumpur-based bank plans to generate about a fifth of its profit from abroad in five years, up from 4 per cent now, as it expands in Southeast Asia, he said.

'The profits are coming in and we know it's sustainable,' Tajuddin said. 'Malaysia's economy is doing quite well, with the impetus that has been put forward by the government.'

Malaysia's gross domestic product may grow as much as 6 per cent next year after expanding 7 per cent in 2010, according to an Oct. 15 Ministry of Finance report. Prime Minister Datuk Seri Najib Razak's government has identified US$444 billion in projects led by non-state companies to spur investment.

Shares of RHB, controlled by Malaysia's biggest pension fund, fell 0.1 per cent to RM8.08 at the 5 pm close of trading in Kuala Lumpur yesterday. The stock's 52 per cent advance this year makes it the best performer on the nation's FTSE Bursa Malaysia KLCI Index, which has climbed 19 per cent.

bIndonesia Takeover

Malayan Banking Bhd, the country's biggest lender by assets, posted a record profit for the 12 months ended June 30, helped by earnings at PT Bank Internasional Indonesia, which it bought in 2008.

RHB, whose net income almost tripled from 2006 to the end of last year, aims to complete the acquisition and listing of Indonesian lender PT Bank Mestika Dharma by the first quarter of 2011, pending regulatory approval, Tajuddin said. The company plans to list the bank on the Jakarta Stock Exchange before completing the purchase.

That acquisition may double RHB's share of earnings coming from abroad to 8 per cent of the total, Tajuddin said. Apart from Indonesia, both Thailand and Vietnam look 'promising,' he said. The company has an office in Vietnam and branches in Singapore, Thailand and Brunei. -- Bloomberg