KUALA LUMPUR (Feb 28): RHB Bank Bhd posted a 43% increase in net profit to RM631.17 million for the fourth quarter ended Dec 31, 2021 (4QFY21) from RM438.63 million in the previous year’s corresponding quarter, attributed to lower expected credit losses (ECL).

Net profit for the quarter was equivalent to 15.34 sen per share, up from 10.94 sen per share in 4QFY20.

It proposed a final dividend of 25 sen per share, comprising 15 sen cash and an electable portion under the dividend reinvestment plan of 10 sen per share.

In total, the group announced a total of 40 sen per share in dividends for the financial year ended Dec 31, 2021 (FY21), translating to a payout ratio of 62.9% — its highest ever for the group.

Revenue for the quarter was slightly lower at RM2.89 billion, down 6% from RM3.08 billion a year earlier.

For the full-year period, its net profit rose 29% to RM2.62 billion from RM2.03 billion in the prior year, while revenue decreased 6% to RM11.75 billion from RM12.5 billion.

In a statement, the bank said its net fund based income increased to RM5.87 billion amid a 24% year-on-year (y-o-y) drop in funding cost, supported by current account savings account (CASA) growth of 4.5%, while its net interest margin for the year was 2.14% compared with 2.06% in the preceding year.

Meanwhile, non-fund based income declined to RM2.16 billion on lower brokerage income and net trading and investment income, offset by higher insurance underwriting surplus and fee income growth from capital market, asset management and commercial banking.

Its operating expenses increased 4% y-o-y to RM3.52 billion, but the bank saw improvement in its cost-to-income ratio to 45.2% from 47.1% in FY20.

ECL for the period fell to RM737.2 million, amid lower ECL on loans and higher bad debts recovered during the year. Its credit charge ratio improved to 0.29% from 0.58% in FY20.

“The group had demonstrated resilience and the ability to sustain growth, as well as providing the much needed support to our customers amid continued uncertainty in the operating environment.

“Nevertheless, we remain prudent in managing our asset quality while continuing to enhance our governance and risk management practices. The group’s capital and liquidity positions for FY21 remain strong,” said RHB officer-in-charge/principal officer Mohd Rashid Mohamad.

RHB said its balance sheet remains robust, highlighting the 6.8% growth in total assets to RM289.5 billion as at Dec 31, 2021, with its net assets per share standing at RM6.76. Its shareholders’ equity stood at RM28 billion as at end FY21.

Its common equity tier-1 (CET-1) ratio remained strong at 17.2%, while its total capital ratio ended FY21 at 19.8%.

Gross loans and financing grew 6.7% y-o-y to RM198.5 billion, supported by growth in mortgage, auto finance, SME, commercial and Singapore, while domestic loans and financing grew 4.8%.

RHB’s gross impaired loans stood at RM3 billion as at Dec 31, 2021, versus RM2.6 billion as at September 2021 and RM3.2 billion as at Dec 31, 2020

Its gross impaired loans ratio was 1.49% as at Dec 31, 2021, against 1.32% as at September 2021 and 1.7% as at Dec 31, 2020.

Loan loss coverage ratio, excluding regulatory reserves, remained above 100%, at 122.4% as at end-December 2021, compared with 147.9% in September 2021.

Customer deposits for the period increased 7.5% to RM218.7 billion, which it attributed to fixed and money market time deposits growth of 9% and CASA of 4.5%.

Looking ahead, it said the global economy continues to recover, supported by the positive momentum in economic activities and the gradual reopening of international borders, noting that risks to growth remain given the emergence of new Covid-19 variants.

“For the banking sector, the demand for credit is projected to improve in tandem with economic growth prospects and similarly, interest rates are also expected to normalise gradually this year.

“The industry is anticipated to remain resilient supported by strong capital and liquidity levels, and adequate impairment provisions made over the last two years,” said the bank.

At the time of writing, RHB’s stock was up 0.52% or three sen to RM5.76.