KUALA LUMPUR (May 30): RHB Bank Bhd's net profit in the first quarter ended March 31, 2022 (1QFY22) fell 7.69% year-on-year (y-o-y) to RM600.27 million from RM650.63 million no thanks to higher taxes — which was up 35% y-o-y to RM289.3 million — and lower net income.

Stripping out the taxes, the banking group reported a pre-tax profit of RM890.6 million, which is 3.1% higher than the RM864 million recorded a year ago. The y-o-y pre-tax profit improvement was mainly due to higher net funding income, lower modification loss, lower operating expenses and lower allowances for credit losses, offset by lower non-fund based income, noted RHB on Monday (May 30).

RHB saw its tax and zakat expenses rise 36% y-o-y to RM289.3 million from RM213.3 million a year earlier. Companies with a chargeable income above RM100 million for the year of assessment 2022 are taxed a one-off ‘prosperity tax’ rate of 33% instead of the blanket 24% previously.

Meanwhile, net income slipped 1.01% to RM1.9 billion from RM1.92 billion due to lower Islamic banking income on higher expenses, and as net interest margin slipped to 2.11% from 2.17% which affected net interest income.

Quarterly earnings per share fell to 14.49 sen, from 16.22 sen a year earlier, RHB's filing showed.

RHB also said the banking group recorded improvements in cost-to-income ratio at 45.1% versus 46% a year ago.

Gross impaired loans were at RM3 billion with a gross impaired loans ratio of 1.5% at end-1QFY22, compared with RM3.1 billion and 1.66% respectively at end-1QFY21, it said.

“Allowance for credit losses was at RM153.8 million, 11.5% lower than previous year. Credit charge ratio was at 0.29% compared to 0.39% last year,” RHB said.

The group’s gross loans and financing grew by 7% to RM201.3 billion, mainly supported by growth in mortgage, corporate, SME and its Singapore operations. Domestic loans and financing grew 5.6% y-o-y, it added.

“Customer deposits increased by 3.9% to RM226.5 billion, largely attributable to growth in fixed deposits and money market time deposits,” it added.

On prospects, RHB sees further expansion in loans growth this year led by demand from businesses and consumers.

“Overall, the banking sector is projected to remain resilient with healthy capital and liquidity positions, supported by the adequate level of provisioning made since the beginning of the pandemic,” it said.

In a separate statement, Mohd Rashid Mohamad, group managing director and group chief executive officer of RHB Banking Group, said: “Going forward, we will remain prudent in managing the business and will focus on driving responsible growth, as well as managing our asset quality. We will also continue to provide the appropriate assistance to our customers who remain impacted by the Covid-19 pandemic.

"We anticipate stronger economic growth in FY22, riding on the country’s high vaccination rate and the resumption of all economic activities. In light of this and to address the accelerated shifts in customer behaviour and preferences especially over the last couple of years, we have now launched our new three-year strategy 2022–2024, ‘Together We Progress 24’ (TWP24), which will drive our ambition to be a leader in Service Excellence.”

Shares of RHB were unchanged at RM5.95 at noon market break, giving it a market capitalisation of RM24.65 billion.