Record-high dividend payout of 63% by RHB Bank

PETALING JAYA: RHB Bank Bhd has rewarded its shareholders with a record-high dividend payout of 62.9%, as its full-year net profit surpassed the level seen in pre-pandemic 2019.

The banking group, which provided loan repayment assistance to 84,665 borrowers amounting to RM21.3bil as of end-Jan 2022, said the total dividend for the financial year of 2021 (FY21) was 40 sen.

In comparison, the total dividend in FY20 was 17.65 sen, translating into a payout ratio of 34.8%.

Looking ahead, RHB Bank officer-in-charge and principal officer Mohd Rashid Mohamad said the recovery in economic activities would further support the improvement in the banking group’s performance.

However, he cautioned that the one-off Cukai Makmur or prosperity tax could likely be a drag on earnings this year.

The normalised return on equity (RoE), excluding modification loss, is targeted at 10% in 2022, slightly lower than the 10.3% recorded last year.

Meanwhile, the gross loans growth is also expected to be lower in 2022 at between 4% and 5% compared with 6.7% last year.

This would be largely due to the loans to be given out to large corporations, according to Mohd Rashid.

“The loan growth (in 2022) will mainly come from small and medium enterprises (SMEs), retail and commercial segments. Perhaps, from the perspective of the large corporations, we believe large corporations will mostly go into the capital markets and raise funds there.

“There is ample liquidity there, pricing is attractive and in fact, we see a lot more activities happening in the last couple of months and the pipeline is also showing a very positive trend on corporate raising funds through the capital markets,” he said during a virtual media briefing yesterday.

In the fourth quarter ended Dec 31, 2021, RHB Bank’s net profit rose by 43.89% year-on-year (y-o-y) to RM631.17mil compared with RM438.63mil in the previous corresponding quarter.

The higher earnings was due to lower expected credit losses (ECL).

The revenue, however, declined by 6.14% y-o-y to RM2.89bil from RM3.08bil a year earlier, dragged down by non-fund based income.

Non-fund based income fell due to lower fee income from brokerage and commercial banking, and lower net trading and investment income. Earnings per share were 15.34 sen for the quarter under review.

A final dividend of 25 sen was declared for the fourth quarter.

As for FY21, RHB Bank’s net profit improved by 28.82% y-o-y to RM2.62bil from RM2.03bil a year earlier.

On the other hand, revenue dropped by almost 6% y-o-y to RM11.75bil compared with RM12.5bil in the preceding corresponding period.

Mohd Rashid pointed out that the banking group’s net fund based income grew 11.5% y-o-y to RM5.87bil, mainly due to proactive funding cost management.

“Non-fund based income dipped 7.6% y-o-y to RM2.16bil mainly from lower brokerage income and net trading and investment income, despite higher insurance underwriting surplus and fee income growth from capital market, asset management and commercial banking.“The ECL reduced to RM737.2mil arising from lower ECL on loans and higher bad debts recovered during the year.

“Consequently, the credit charge ratio improved to 0.29% compared with 0.58% last year,” he said.

Mohd Rashid pointed out that RHB Bank’s capital position remains strong, with its Common Equity Tier-1 and total capital ratio standing at 17.2% and 19.8% respectively.

Its gross loans and financing grew 6.7% y-o-y to RM198.5bil, mainly supported by growth in mortgage, auto finance, SME, commercial and Singapore segments.

“Gross impaired loans was RM3bil as at Dec 31, 2021 with gross impaired loans ratio of 1.49%, compared with RM2.6bil and 1.32% respectively as of September 2021, and RM3.2bil and 1.71% respectively as of December 2020,” he said.

“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,” he said.

On the appointment of a new chief executive officer for RHB Bank following the departure of Datuk Khairussaleh Ramli, Mohd Rashid said the bank is in the process of identifying and evaluating suitable candidates.

“The announcement will be made in due course,” he said.

Malayan Banking Bhd recently announced the appointment of Khairussaleh as its group president and CEO, effective May 1, 2022.