Rhb Bank Bhd. · MYX:RHBBANK

Rhb Bank Bhd — FY2017 Earnings Presentation

36 slides from Rhb Bank Bhd's earnings presentation, Feb 27, 2018

1. Slide 1: Analysts Presentation FY2017 Financial Results

   Analysts Presentation FY2017 Financial Results Dato' Khairussaleh Ramli Group Managing Director RHB Banking Group 27 February 2018

2. Slide 2: Executive Summary

   Executive Summary FY2017 Financial Results Strategy Update Summary and Outlook

3. Slide 3: Highlights of FY2017 Performance (1/2)

   Highlights of FY2017 Performance (1/2)  Net profit rose 16.0% y-o-y to RM1.95 billion, pre-tax profit up 14.6% to RM2.6 billion  Earnings improvement mainly due to higher net fund based income, lower loan loss impairment and lower impairment losses on other assets, partially offset by lower non- P

4. Slide 4: Highlights of FY2017 Performance (2/2)

   Highlights of FY2017 Performance (2/2)  Higher profit in Group Treasury & Global Market mainly due to higher net funding income and higher impairment write-back on loans  Retail Banking - Mortgage loans and financing grew by 13.2% Y-o-Y, market share increased to 9.1% from 8.6% in December 2016 

5. Slide 5: RHB Banking Group Scorecard for 2017

   RHB Banking Group Scorecard for 2017 Top Level Indicators Target 2017 Actual FY2017 ROE 9% - 10% 8.7% 3.7% Loans Growth 5% (Domestic : 5.2%) CASA Growth 8% 18.8% Gross Impaired Loans Ratio < 2.5% 2.23% Cost to Income Ratio < 50% 49.9% Overseas Profit Contribution 10% -11% Page | 5

6. Slide 6: Executive Summary

   Executive Summary FY2017 Financial Results Strategy Update Summary and Outlook

7. Slide 7: Improved profitability Y-o-Y supported by pick up in loans growth

   Improved profitability Y-o-Y supported by pick up in loans growth, prudent funding cost management and lower allowances for loan and asset impairment; CIR and GIL ratios declined with loan loss coverage exceeding 100% Financial Position Financial Results Key Financial Ratios Operating Non Interest T

8. Slide 8: Strong underlying performance in the current quarter

   Strong underlying performance in the current quarter with operating profit before allowances up 4% Q-o-Q and 21% Y-o-Y, although net profit declined Q-o-Q due to higher pre-emptive provision for impairment losses on other assets in oil and gas RM’mil Q4 Q3 Q4 Q-o-Q Y-o-Y 2017 2017 2016 % % Net Inter

9. Slide 9: Active management of funding and liquidity resulted in solid net fund based income

   Active management of funding and liquidity resulted in solid Y-o-Y net fund based income growth and stable NIM Y-o-Y: +5% RM’bil 9.89 10.04 Q-o-Q: 0% 5.57 5.49 4.32 4.55 2.53 2.56 1.37 1.16 1.41 1.16 Q3 2017 Q4 2017 2016 2017 Fund Based Income Fund Based Expenses Net Fund Based Income NIM 2.22% 2.19

10. Slide 10: Net wealth management fee income and brokerage income increased Y-o-Y

    Net wealth management fee income and brokerage income increased Y-o-Y, offset by lower IB related fee income; Q-o-Q increase driven by forex gain and IB related fee income RM’mil Y-o-Y: -2% Y-o-Y: +32% 1,870 1,833 64 62 Q-o-Q: +20% 459 447 Others 208 191 N2 Treasury Income Insurance Underwriting Sur

11. Slide 11: Operating expenses tightly managed, grew 2.9%

    Operating expenses tightly managed, grew 2.9% from higher personnel cost and IT- related expenses in line with the Group’s investments in IT and Digital Capabilities; CIR contained at <50% Y-o-Y: +3 % 3,095 3,187 371 359 Administration & 250 General Expenses 238 Marketing Expenses 699 727 Establishm

12. Slide 12: Loans growth driven by mortgage and SME

    Loans growth driven by mortgage and SME; Domestic growth exceeded industry’s, partially offset by Singapore operations due to several large repayments and impact of stronger RM Y-o-Y Composition RM’mil 2017 2016 Growth % 2017 2016 GROUP RETAIL 76,269 70,138 9% 48% 46% Mortgage 46,920 40,509 16% 29%

13. Slide 13: Strong growth in CASA, total deposits remained stable

    Strong growth in CASA, total deposits remained stable Y-o-Y Customer Deposits CASA Y-o-Y: +19% Q-o-Q : +11% Y-o-Y: +0.3% 50.5 Q-o-Q : -1% 45.6 42.5 9.9 168.5 166.2 9.8 165.6 9.3 42.5 45.6 50.5 40.6 35.8 24.9 24.4 33.2 20.5 RM’mil Dec 2016 Sep 2017 Dec 2017 98.1 98.5 95.2 Demand Deposits Saving Depos

14. Slide 14: Allowances for loan impairment declined; asset quality improved

    Allowances for loan impairment declined as oil and gas accounts impaired in last two years adequately provided for; Asset quality improved from active management, with loan loss coverage exceeding 100%*N1 800 Allowances for Loan Impairment Asset Quality 1.0 0% 0.80% 4,300 2.43% 2.39% 2.31% 700 2.29%

15. Slide 15: O&G Exposure has gradually declined

    O&G Exposure (Loans + Bonds) has gradually declined with a corresponding drop of amount in Watchlist Oil and Gas Related Industry Upstream Downstream Total Loans + Bonds % to % to % to Outstanding RM’ bil Gross Loans RM’ bil Gross Loans RM’ bil Gross Loans Dec 2017 3.4 2.12% 1.8 1.09% 5.2 3.21% Dec

16. Slide 16: Higher profit from Treasury and CBIB; pre-tax profit by business unit

    Higher profit from Treasury and CBIB from higher net funding income and lower loan impairment respectively; Retail profit improved notwithstanding margin compression; Higher loan impairment allowances decreased profit at BBG; Singapore impacted by impairments in oil and gas sector Pre-tax Profit 1,1

17. Slide 17: Robust capital position for Group and key banking subsidiaries

    Robust capital position for Group and key banking subsidiaries RHB Bank Group RHB Bank 20. 0% 20. 0% 18. 0% 15% 18. 0% 16. 0% 16. 0% 14. 0% 11% 14. 0% 12. 0% 12. 0% 7% 10. 0% 10. 0% 13.4% 17.2% 13.9% 14.2% 17.2% 13.1% 13.4% 15.9% 8.0 % 13.1% 8.0 % 12.3% 12.7% 14.7% 3% 6.0 % 6.0 % 4.0 % 4.0 % -1% 2.0

18. Slide 18: Final cash dividend of 10 sen per share proposed

    Final cash dividend of 10 sen per share proposed, total dividend payout of 31% in 2017 Dividend Per Share (sen) Market Capitalisation RHB Capital RHB Bank 5.40 5.50 5.00 5.00 4.68 4.71 16.30 15.00 4.50 12.00 12.00 20.1 21.7 18.8 18.9 4.00 10.30 10.00 7.00 6.00 12.00 3.50 6.00 6.00 5.00 5.00 - 3.00 2

19. Slide 19: Executive Summary

    Executive Summary FY 2017 Financial Results Strategy Update Summary and Outlook

20. Slide 20: Update on IGNITE 2017 achievements

    Update on IGNITE 2017 achievements Affluent segment strategy Mass Affluent segment strategy Page | 20

21. Slide 21: Update on IGNITE 2017 achievements (cont'd)

    Update on IGNITE 2017 achievements (cont’d) Asset management strategy SME growth strategy $ Page | 21

22. Slide 22: Update on IGNITE 2017 achievements (cont'd)

    Update on IGNITE 2017 achievements (cont’d) Initiative Objective / Target Achievement CIB growth Boost returns via  Increase in product holding ratio for domestic top corporates to 5.37 as strategy reinforcement of Client at Dec 2017 from 4.62 in Dec 2016 through refined client coverage model Cover

23. Slide 23: FIT@22 Our Roadmap to Win

    “FIT@22” OUR ROADMAP TO WIN Way forward : Our priorities will be to strengthen Malaysia and win in targeted segments; focus on our niche and strengths overseas while we explore partnerships; and build a winning operating model  Affluent – leveraging on SME customer base  Strengthen Malaysia as our

24. Slide 24: Digital Transformation Program: AGILE way of working

    Digital Transformation Program: 1. AGILE way of working – Faster speed to market, increased productivity, customer centricity and new talent acquisition and development AGILE way of working From traditional banking … to an AGILE way of culture … working  Cross functional, self sufficient squads set

25. Slide 25: Digital Transformation Program: Re-imagining customer journeys

    Digital Transformation Program: 2. Re-imagining customer journeys to deliver superior experience – our achievements so far Digital Customer Journeys Analytics: RHB MyHome App  RM400m additional customer deposits in 5 months • 1st of its kind online mortgage application and documents submission; 1,3

26. Slide 26: Executive Summary

    Executive Summary FY 2017 Financial Results Strategy Update Summary and Outlook

27. Slide 27: Economic Outlook

    Economic Outlook  Malaysia’s 2018 real GDP is forecasted to grow at 5.2% supported by strong growth in private consumption and private investments.  The Malaysian banking sector is expected to see a recovery in loans growth primarily from stronger business loans  Capital market activities are als

28. Slide 28: Concluding Remarks

    Concluding Remarks  The Group delivered a sustained profit growth momentum in 2017  H2 of 2017 showed a pick up in loans and financing driven by strong growth in mortgages and SME. This, and prudent management of funding cost resulted in stable net interest margin  Asset quality improved and oper

29. Slide 29: RHB Banking Group Scorecard for 2018

    RHB Banking Group Scorecard for 2018 Top Level Indicators Actual FY2017 Target 2018 ROE 8.7% 9.0%-10.0% Loans Growth 3.7% 6% CASA Growth 18.8% 10% Gross Impaired Loans Ratio 2.23% <2.2% Cost to Income Ratio 49.9% <50% Overseas Profit Contribution -11% +ve Page | 29

30. Slide 30: www.rhbgroup.com

    www.rhbgroup.com INVESTOR RELATIONS CONTACT: Mr. Syed Ahmad Taufik Albar Group Chief Financial Officer +(603) 9280 7090 taufik.albar@rhbgroup.com This material is prepared for general circulation. Any recommendation or view contained in this document does not have regard to the specific investment o

31. Slide 31: Key Business Highlights

    APPENDIX Key Business Highlights

32. Slide 32: Retail Banking

    Retail Banking Mortgage Auto Finance RM’bil Y-o-Y: +13% RM’bil Y-o-Y: -5% 10. 0 60. 0 9.0 50. 0 8.0 7.0 40. 0 6.0 9.2 5.0 8.7 30. 0 20. 0 42.9 48.5 4.0 3.0 2.0 10. 0 1.0 0.0 0.0 2016 2017 2016 2017 Market Market 8.6% 9.1% 5.5% 5.1% Share Share Personal Use Deposits Y-o-Y: +8% RM’bil Y-o-Y: +8% RM’bi

33. Slide 33: Investment Banking – Market Positions & Asset Management

    Investment Banking – Market Positions & Asset Management YTD Dec 2017 RM’bil Asset Under Management Market Share Ranking Y-o-Y: +6% Equity: - By value 8.3% 5th - By volume 12.2% 3rd 55.2 52.3 6.2 7.9 Debt Capital Markets: 16.5 - MYR sukuk 4 10.8% 19.7 - Total MYR bonds (Conventional & Islamic bonds)

34. Slide 34: Business Banking

    Business Banking Gross Loans Customer Deposits RM’bil RM’bil Y-o-Y: +9% Y-o-Y: +2% 23. 0 22.1 22.6 21. 0 19. 0 17. 0 12.7 13.4 23.9 15. 0 13. 0 22.0 11. 0 9.4 9.2 9.0 7.0 5.0 2016 2017 2016 2017 Fixed Deposits Demand Deposits SME Market Share RM’bil Asset Quality 2.1% 2.2% 8.8% 9.0% 8.7% 7.2% 6.2% 0

35. Slide 35: Islamic Banking

    Islamic Banking PBT Gross Financing RM’mil Y-o-Y: +11% RM’bil Y-o-Y: +26% 45.0 40.0 35.0 30.0 480 25.0 43.0 432 20.0 34.1 15.0 10.0 2016 2017 2016 2017 Market 7.8% 8.9% Share Asset Quality Gross Financing/ RM’mil Total Gross Financing (Domestic) 1.2% 0.8% 29.7% 23.0% 24.8% 19.5% 393 16.5% 344 2016 2

36. Slide 36: RHB Singapore

    RHB Singapore SGD’mil Loans, Deposits & Total Assets PBT SGD’bil 80 74 8.0 6.7 60 32 34 0.4 39 0.2 4 40 20 35 42 46 (89) (97) 7.6 6.5 - (12) 6.0 4.2 5.0 3.7 (2 0) (4 0) (81) (91) (6 0) 2016 2017 (8 0) (8) (6) Deposits (1 00) 2013 2014 2015 2016 2017 Gross Loans Total Assets (RHB Securities Singapore

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