Rhb Bank Bhd. · MYX:RHBBANK
Rhb Bank Bhd — H1 2020 Earnings Presentation
44 slides from Rhb Bank Bhd's earnings presentation, Aug 28, 2020
Slide 1: RHB Bank Berhad Analyst Presentation 1st Half 2020 Financial Results
RHB BANK BERHAD Analyst Presentation 1st Half 2020 Financial Results Dato' Khairussaleh Ramli Group Managing Director RHB Banking Group 28 August 2020
Slide 2: Executive Summary 1st Half 2020 Financial Results Strategy Update
2 1. Executive Summary 2. 1st Half 2020 Financial Results 3. Strategy Update 4. Summary and Outlook
Slide 3: Executive Summary
3 Executive Summary
Slide 4: Intensifying efforts to engage customers before moratorium ends (1/2)
Intensifying efforts to engage customers and work out targeted payment assistance before 4 moratorium ends (1/2) 4 Mobilised a “Credit War Room”: Set credit strategy in response to the pandemic and coordinate efforts to ensure consistent and structured response across the Group Ensure adequate
Slide 5: Intensifying efforts to engage customers before moratorium ends (2/2)
Intensifying efforts to engage customers and work out targeted payment assistance before 5 moratorium ends (2/2) 5 Business Banking & Corporate Banking Business Banking: Ongoing customer engagement exercise to reach out to the entire customer base (approx. 22k). Key focus is on the vulnerable an
Slide 6: Assistance extended to customers through moratorium and relief funds
Assistance extended to customers through moratorium and relief funds 6 6 Moratorium (as at 14 August 2020) SME Relief funds: % of Outstanding Loan Balance RM bil % SRF - disbursed RM910 mil to >1,300 clients (as at 21 August GROUP RETAIL 75.2 82.5 2020) Mortgage 49.3 81.4 BizPower Relief Fund
Slide 7: Highlights of H1 2020 Performance
7 Highlights of H1 2020 Performance 7 Year-on-year Net profit of RM971.7 million (-22.0% Y-o-Y). Normalised for one-off net modification loss (ML) of RM392.4 million, net profit was RM1,257.9 million, or up 1.0% Y-o-Y Total income declined 5.7%, dragged by the net ML. Excluding the net ML, total
Slide 8: RHB Banking Group Scorecard for FY2020
RHB Banking Group Scorecard for FY2020 8 8 Top Level Indicators Target FY2020 Actual H1 2020 ROE 10.3% - 10.5% 7.4% [9.6%]* Loans Growth 4.0% 4.9% CASA Growth 4.0% (Group) 15.8% Gross Impaired Loans Ratio 1.95% 1.87% Cost-to-Income Ratio 48.9% 50.8% [45.5%]* * Excluding impact of net modification lo
Slide 9: 1st Half 2020 Financial Results
1st Half 2020 Financial Results
Slide 10: Profit impacted by higher ECL allowances and net modification loss
Profit impacted by higher ECL allowances and net modification loss (ML); On a normalised basis, 1010 net profit up 1.0%; Higher credit charge ratio mainly due to COVID-19 impact Financial Position Financial Results Key Financial Ratios Total Gross Total Operating Profit Return on Non-Fund Based/ Ass
Slide 11: Q2 net profit declined owing to net ML and higher ECL allowances
Q2 net profit declined Y-o-Y and Q-o-Q owing to net ML and higher ECL allowances; Q-o-Q also 1111 affected by lower net fund based income from OPR cuts and marginal increase in opex Q2 Q1 Q2 H1 H1 RM’ mil Q-o-Q Y-o-Y Y-o-Y 2019 2020 2020 2019 2020 Net Interest Income 880.9 894.5 889.8 -0.5% 1.0% 1,7
Slide 12: Underlying performance of H1 2020 excluding net ML improved
The underlying performance of H1 2020 (excluding net ML) improved, driven by higher net fund 1212 and non-fund based income and opex reduction; Q2 aided by growth in non-fund based income Q2 Q1 Q2 H1 H1 RM’ mil Q-o-Q Y-o-Y Y-o-Y 2019 2020 2020 2019 2020 Total Income (A) 1,776.6 1,745.2 1,573.8 -9.8%
Slide 13: Net modification loss and estimated unwinding impact
Net modification loss and estimated unwinding impact 13 13 The net modification loss will be unwound gradually over the remaining life of the HP and PF loans/financing which range between 3 and 8 years RM’mil 27% 20% 20% 18% 15% 2020 2021 2022 2023 2024 2025-2028 By 2024, 73% of the net modificati
Slide 14: Net fund based income grew 3.5% Y-o-Y
Net fund based income grew 3.5% Y-o-Y mainly due to proactive funding cost management; 1414 NIM compression continued in line with expectations RM’bil Y-o-Y: -6.6% Y-o-Y: +2.6% Y-o-Y: -14.0% Q-o-Q: -1.7% 5.66 5.29 Y-o-Y: +3.5% 2.85 2.75 3.25 2.55 2.79 2.41 2.50 1.64 1.49 1.21 1.26 1.31 1.24 Q2 2019
Slide 15: Non-fund based income grew 9.8% Y-o-Y
Non-fund based income grew 9.8% Y-o-Y mainly due to higher investment and trading income, 1515 insurance underwriting surplus and brokerage income Y-o-Y: +27.7% Y-o-Y: +9.8% RM’mil Q-o-Q: +50.0% 1,211.9 1,104.1 43 Others 727.1 41 569.5 27 518 Treasury Income 428 484.8 30 Insurance Underwriting 16 38
Slide 16: Operating expenses declined 1.2% Y-o-Y
Operating expenses declined 1.2% Y-o-Y, driven by continued disciplined management of 1616 discretionary spend; Excluding net ML, CIR improved to 45.5% Q2 Q1 Q2 H1 H1 RM’ mil Q-o-Q Y-o-Y Y-o-Y 2019 2020 2020 2019 2020 Personnel Costs 516.3 517.5 517.5 0.0% 0.2% 1,024.0 1,035.0 1.1% Establishment Cos
Slide 17: Gross loans rose by 4.9% Y-o-Y
Gross loans rose by 4.9% Y-o-Y led by mortgage, SME and Singapore, while Corporate grew 2.2% 1717 Jun Dec Jun Dec 2019 Jun 2020 RM’mil YTD Y-o-Y 2019 2019 2020 % % GROUP RETAIL 87,772 90,079 90,556 0.5% 3.2% 51 50 Mortgage 56,349 58,585 60,346 3.0% 7.1% 33 33 Commercial Property Financing 4,838 4,76
Slide 18: Total deposits grew 7.8% Y-o-Y; CASA ratio improved
Total deposits grew 7.8% Y-o-Y mainly attributed to growth in CASA and FD; CASA ratio improved 1818 further to 28.6% Customer Deposits CASA by Segment RM’bil Y-o-Y : +7.8% YTD : +4.6% 199.4 Jun Dec Jun 190.6 RM’bil YTD Y-o-Y 185.0 2019 2019 2020 48.9 56.9 Retail 16.8 16.9 19.6 16.1% 16.9% 49.2 Busin
Slide 19: Credit charge ratio rose in Q2 2020; GIL ratio improved
Credit charge ratio rose in Q2 2020 mainly due to higher ECL allowances set aside for potential 19 COVID-19 impact and macroeconomic forward looking adjustments; GIL ratio improved Allowances for Loan Impairment 500 Gross Impaired Loans 500 RM’mil 450 0.46% 0.5 0% 450 0.40% 0.5 0% 6,000 2.15% 2.16%
Slide 20: GIL ratio in all segments closely monitored during moratorium
GIL ratio in all segments continue to be closely monitored during moratorium 20 20 Retail Banking Business Banking Wholesale Banking Mortgage GBB Corporate 900 1.40% 1000 3.50% 1.67% 1.67% 1.69% 1.30% 3.10% 900 850 1.18% 900 2.82% 2.79% 3.00% 1.67% 800 1.17% 1.20% 1.64% 2.50%800 1.65% 1.10% 800 750
Slide 21: Profit dragged down by higher ECL in Retail and Business Banking
Profit dragged down by higher ECL in Retail and Business Banking segments; CBIB’s and Treasury’s 2121 profit growth attributed to higher total income and trading & investment income respectively Revenue 1.1% 1,316 1,330 5.8% 2.6% RM’mil 0.6% 695 736 747 767 545 549 20.7% 13.9% 7.2% 80 97 132 151 188
Slide 22: Capital position remains strong for the Group and key subsidiaries
Capital position remains strong for the Group and key banking subsidiaries 22 22 RHB Bank Group RHB Bank 20. 0% 20. 0% 19. 0% 18. 0% 18. 0% 18.6% 18.5% 17. 0% 16. 0% 16.5% 17.2% 16. 0% 16.3% 16.6% 15. 0% 16.3% 16.6% 14. 0% 14.3% 15.3% 14.3% 15.3% 14. 0% 13. 0% 12. 0% 12. 0% 11. 0% 10. 0% 10. 0% 9.0
Slide 23: Strategy Update
Strategy Update
Slide 24: FIT22 Key Highlights (1/2)
FIT22 Key Highlights (1/2) 24 24 • Premier Banking customers increased to 73.1k (+4.7% from December 2019), of which 34.2% are SME owners Affluent • Total AUM of Premier customers of RM35.4 bil (+6.0% from December 2019) • Deposits increased to RM29.7 bil (+5.0% from December 2019) SME • Business Ba
Slide 25: FIT22 Key Highlights (2/2)
FIT22 Key Highlights (2/2) 25 25 Analytics • Continued to drive business performance via analytics with RM55.5 mil of benefits realised as of June 2020 and big • Increased analytics use cases for 2020, targeting RM43 mil of analytics benefits (use cases e.g. include identifying data good customers f
Slide 26: Summary & Outlook
Summary & Outlook
Slide 27: Outlook for the rest of FY2020 (1/2)
Outlook for the rest of FY2020 (1/2) 27 27 Net fund based income will be impacted by OPR cuts Net interest margin (NIM) is expected to decline to around 1.96% from 2.12% in FY2019 excluding additional rate cuts, if any Non fund based income: Income Interest rate is expected to remain low, fu
Slide 28: Outlook for the rest of FY2020 (2/2)
Outlook for the rest of FY2020 (2/2) 28 28 Continue to operate from position of strength from capital and liquidity perspective, notwithstanding the dispensation allowed by BNM Liquidity LCR as at end-June stood at 141.5% NSFR as at end-June at 107.7% Grow deposits, strong growth in CASA of
Slide 29: RHB Banking Group's Revised Scorecard for FY2020
RHB Banking Group’s Revised Scorecard for FY2020 29 29 Top Level Indicators Original Target FY2020 Revised Target FY2020 ROE 10.3% - 10.5% ≥8.0%* Loans Growth 4.0% 2%-3% CASA Growth 4.0% (Group) 5%-6% Gross Impaired Loans Ratio 1.95% <1.95% Cost-to-Income Ratio 48.9% <48.9%* * Excluding impact of ne
Slide 30: Economic Outlook
Economic Outlook 30 30 Malaysia’s real GDP growth contracted -17.1% Y-o-Y in Q2 2020 (Q1 2020: +0.7%) driven by the decline in private consumption, investments and net exports GDP growth is expected to contract by 4.0% in 2020 However, with the controlled re-opening of various sectors of the e
Slide 31: GMD's Concluding Remarks
GMD’s Concluding Remarks 31 31 Despite a challenging environment, we delivered commendable revenue growth, expense control and robust risk management in H1 2020 Our priority is to reach out to as many customers to provide assistance while we continue to support them for growth/rebound. For this
Slide 32: Thank You
THANK YOU www.rhbgroup.com INVESTOR RELATIONS CONTACT Haryati Yahya Direct Line : +(603) 9280 2489 Email : haryati.yahya@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 objectives, f
Slide 33: Appendix
Appendix
Slide 34: Key Financial Data
Key Financial Data 34 34 Financial Data FY2016 FY2017 FY2018 FY2019 H1 2020 RM’mil Income Statement Total Income 6,190 6,384 6,806 7,101 3,319 Pre-Provisioning Operating Profit 3,095 3,200 3,448 3,629 1,631 Profit Before Tax 2,232 2,558 3,119 3,350 1,267 Net Profit 1,682 1,950 2,305 2,482 972 Balanc
Slide 35: Key Financial Ratios
Key Financial Ratios 35 35 Financial Ratios FY2016 FY2017 FY2018 FY2019 H1 2020 Profitability Return on Equity* 8.6% 9.1% 10.3% 10.3% 7.4% Net Interest Margin 2.18% 2.18% 2.24% 2.12% 2.07% Cost to Income Ratio 50.0% 49.9% 49.3% 48.9% 50.8% Asset Quality Gross Impaired Loan Ratio 2.43% 2.23% 2.06% 1.
Slide 36: Segmental Performance H1 2020
Segmental Performance H1 2020 36 36 Fund Based Income 5.3% 1,075 1,132 RM’mil 4.0% 22.3% 9.5% 473 492 7.4% 379 415 440 342 233 217 Retail GBB CBIB Treasury International Non Fund Based Income 38.4% RM’mil 1.6% 17.8% 425 20.8% 27.5% 316 321 307 241 72 198 57 51 65 Retail GBB CBIB Treasury Internation
Slide 37: O&G Exposure (Loans + Bonds)
O&G Exposure (Loans + Bonds) 37 37 Oil and Gas Related Industry Upstream Downstream Total Loans + Bonds Outstanding % to Gross % to Gross % to Gross RM’bil RM’bil RM’bil Loans Loans Loans Jun 2020 3.0 1.7% 1.1 0.6% 4.1 2.3% Dec 2019 2.5 1.4% 1.6 1.0% 4.2 2.4% Dec 2018 3.3 1.9% 1.5 0.9% 4.8 2.8% Dec
Slide 38: Retail Banking
Retail Banking 38 38 RM’bil Gross Loans RM’bil Customer Deposits Y-o-Y: +7.3% Y-o-Y: +3.2% 57.3 61.4 100 .0 90. 0 9.4 11.1 80. 0 7.4 8.4 70. 0 90.6 60. 0 50. 0 87.8 40.5 41.9 40. 0 30. 0 20. 0 Jun 2019 Jun 2020 Jun 2019 Jun 2020 Fixed Deposits Demand Deposits Savings Deposits Retail Market Share Ass
Slide 39: Asset Under Management and Market Positions
Asset Under Management and Market Positions 39 39 RM’bil Asset Under Management Market YTD Jun FY2020 Ranking Share Y-o-Y : +8.7% Equities Broking: 55.2 - By value 8.0% 5th 50.7 - By volume 10.9% 3rd 7.7 7.1 10.5 11.4 Debt Capital Markets: - MYR sukuk 19.6% 2nd - Total MYR bonds (Conventional 17.6%
Slide 40: Investment Banking – Notable Deals
Investment Banking – Notable Deals 40 40 M&A DCM CF/ECM Pinnacle Sunway Sarawak Energy Berhad Issuance of RM1.9 bil via its RM15.0 bil RM450.0 mil Kossan Rubber Industries Berhad Sukuk Musyarakah Programme Acquisition of the Pinnacle Sunway by Sunway REIT (in progress) RM123.0 mil Placement Sole Pri
Slide 41: Business Banking
Business Banking 41 41 RM’bil Gross Loans Customer Deposits RM’bil Y-o-Y: +8.6% Y-o-Y: +6.3% 27.4 29.7 28. 0 27. 0 26. 0 25. 0 13.7 15.3 27.3 24. 0 23. 0 22. 0 25.7 13.6 14.4 21. 0 20. 0 Jun 2019 Jun 2020 Jun 2019 Jun 2020 Fixed Deposits Demand Deposits SME Market Share RM’bil Asset Quality 9.6% 9.5
Slide 42: Islamic Banking
Islamic Banking 42 42 PBT Gross Financing RM’mil RM’bil Y-o-Y: +13.8% 70.0 Y-o-Y: -63.1% 60.0 359 50.0 40.0 30.0 56.1 63.9 20.0 10.0 133 - Jun 2019 Jun 2020 H1 2019 H1 2020 Market 9.5% 10.0% Share Gross Financing/ Asset Quality RM’mil Total Gross Financing (Domestic) 0.82% 0.87% 0.77% 0.78% 39.6% 0.
Slide 43: RHB Singapore
RHB Singapore 43 43 SGD’mil PBT SGD’bil Loans, Deposits & Total Assets 16 8.2 30 20 10 6.8 0.2 0.2 10 19 11 (2) - (2) 8.0 6.6 5.9 (1 0) 4.0 4.9 4.8 (2 0) H1 2019 H1 2020 (3 0) Jun Jun 2019 2019 Jun Jun 2020 2020 Deposits Gross Loans RHB Bank Singapore RHB Securities Singapore Total Assets (RHB Secur
Slide 44: Overseas Loans
Overseas Loans 44 44 Jun Dec Jun RM’mil YTD Y-o-Y 2019 2019 2020 Overseas Operations 16,449 17,252 19,531 13.2% 18.7% Singapore 12,376 12,829 14,900 16.1% 20.4% Others 4,073 4,424 4,631 4.7% 13.7% Cambodia 1,884 2,113 2,435 15.2% 29.2% Thailand 1,654 1,829 1,755 -4.0% 6.1% Laos 217 198 202 2.0% -6.9