KUALA LUMPUR: RHB Bank Bhd targets a 4.5 per cent loan growth for financial year 2024 (FY24) supported by growth in Singapore and Malaysia's improving economy.
Group managing director and group chief executive officer Mohd Rashid Mohamad said the target is also in line with the bank's gross domestic product (GDP) projection for the year which is 4.6 per cent.
"There will be uncertainties and a couple of risk factors that we need to consider going into 2024. For 2023, we grew mainly in Malaysia and Singapore.
"Singapore continues to be our main country in terms of loan growth. In Malaysia, the GDP and economy picking up in 2024 will help us build up micro small and medium enterprises (MSMEs) and SME customers," he told a press briefing on RHB Bank's announcement of its financial results for FY23.
The bank's loans were up 4.8 per cent in FY23 ended Dec 31, 2023 mainly attributed to growth in Singapore and group community banking whereby domestic loans growth stood at 3.4 per cent.
Deposits grew 7.9 per cent year-on-year (YoY) mainly due to fixed deposits which stood at 14.3 per cent and current account saving account (CASA) which was at 3.0 per cent.
Commenting on its CASA composition, Mohd Rashid said customers are leaning towards fixed deposits which have led to the decline in CASA numbers.
"People are moving away from CASA and putting in FD and it requires a higher funding cost from all banks.
"So we see some stabilisation in 2024 but for RHB, in terms of liability management point of view, if we see an opportunity of borrowing foreign currency and swap it to ringgit to replace our ringgit funding needs, that is what we will do," he said.
RHB Bank's net profit for FY23 rose 4.8 per cent to RM2.81 billion from RM2.68 billion in FY22 mainly due to higher non-fund based income and lower expected credit losses (ECL).
Revenue grew to RM16.58 billion versus RM13.13 billion a year prior.
The bank noted net fund based income was RM5.45 billion on the back of higher funding costs, mainly due to fixed deposit growth of 14.3 per cent year-on-year (YoY).
Net interest margin (NIM) for the year was 1.82 per cent.
The group has also been proactively managing funding costs through active liability management. Taking this initiative into account, the effective NIM was 1.93 per cent, it said in a statement.
Non-fund based income increased 30.3 per cent YoY to RM2.32 billion, primarily from higher net gain on forex and derivatives, net trading and investment income and fee income.
Correspondingly, the cost-to-income ratio stood at 47.5 per cent.
Its net profit dropped 24 per cent year-on-year (YoY) to RM585.91 million in the fourth quarter ended Dec 31, 2023 (Q4 2023) versus RM770.59 million in Q4 2022.
The group noted that the decline was mainly due to lower net fund based income and higher ECL.
Revenue for the period rose to RM4.4 billion in the quarter under review from RM3.92 billion in the corresponding quarter the previous year.
Gross impaired loans was RM3.9 billion as of December 2023, with a gross impaired loans ratio of 1.74 per cent, compared with RM3.3 billion and 1.55 per cent respectively, a year ago.
RHB Bank declared a second interim dividend of 25 sen per share, consisting a cash payout of 15 sen per share and an electable portion under a dividend reinvestment plan of 10 sen per share.
Together with the first interim dividend, the full-year dividend amounted to 40 sen per share, equivalent to a payout ratio of 61.1 per cent and a dividend yield of 7.3 per cent for FY23.