Rhb Bank Bhd. · MYX:RHBBANK
Rhb Bank Bhd — Q3 2016 Earnings Presentation
36 slides from Rhb Bank Bhd's earnings presentation, Nov 23, 2016
Slide 1: Analysts Presentation 3rd Quarter 2016 Financial Results
Analysts Presentation 3rd Quarter 2016 Financial Results Dato' Khairussaleh Ramli Group Managing Director RHB Banking Group 23 November 2016
Slide 2: Executive Summary
Executive Summary 3rd Quarter 2016 Financial Results Corporate and Strategy Update Summary and Outlook
Slide 3: Executive Summary (1/4)
Executive Summary (1/4) Y-o-Y pre-tax profit grew 8.9% to RM1.9 billion, net profit increased by 9.1% to RM1.4 billion NormalisedN1 pre-tax and net profit higher by 12.1% and 12.4% respectively Earnings Operating profit before allowances recorded strong growth of 36.0%, underpinned by healthy
Slide 4: Executive Summary (2/4)
Executive Summary (2/4) Earnings well diversified across main business segments : Business ♦ Retail Banking Performance • Normalised PBT up 6.9% to RM825.6 million mainly due to lower operating expenses • Mortgage financing increased by 13.4% on annualised basis, market share improved to 8.5% from 8
Slide 5: Executive Summary (3/4)
Executive Summary (3/4) Made good progress in key IGNITE initiatives: • Increase in premier wealth management sales by 11% since the launch of RHB IGNITE 2017 premier banking value proposition Update • SME market share further strengthened to 9.0% in September 2016 from 8.7% in December 2015 • Ret
Slide 6: Executive Summary (4/4)
Executive Summary (4/4) The Cards & Electronics International (CEPI) Asia Awards Awards • Most Innovative Digital Solution – Commercial • Best Merchant Acquiring Initiative ♦ Structured Products Asia Awards 2016 Malaysia House of the Year ♦ Asian Banking & Finance Wholesale Banking Awards’16 Malay
Slide 7: RHB Banking Group Scorecard For 2016
RHB Banking Group Scorecard For 2016 Top Level Indicators Target 2016 Actual 9M 2016 ROE 10% 10.0% N1 Loans Growth 8% 1.4% N1 CASA Growth 8% 9.9% N1 Gross Impaired Loans Ratio ≤ 2.0% 2.25% Cost to Income Ratio ≤ 53% 49.9% Overseas Profit Contribution 10% -9.2% N2 N1 Annualised N2 Excluding one off i
Slide 8: 3rd Quarter 2016 Financial Results
Executive Summary 3rd Quarter 2016 Financial Results Corporate and Strategy Update Summary and Outlook
Slide 9: Core earnings continued to demonstrate resilience amidst weak economic conditions
Core earnings continued to demonstrate resilience amidst weak economic conditions, current year performance impacted by one-off impairment on corporate bond and certain corporate loan accounts Financial Position Financial Results Key Financial Ratios Operating Non Interest Total Gross Total Profit B
Slide 10: Robust growth in operating profit driven by strong net fund based income
Robust growth in operating profit driven by strong net fund based income and effective cost management initiatives; profitability affected by one-off impairment on other assets and increase in loan losses Q3 Q2 Q-o-Q 9M 9M Y-o-Y 2016 2016 Change 2016 2015 Change RM’mil % % Net Interest Income 849 85
Slide 11: Solid net fund based income growth
Solid net fund based income growth attributable to active management on funding and liquidity, low cost deposits and growth in chosen market segments Y-o-Y: +4% RM’bil Y-o-Y: -2% 7.42 7.24 Q-o-Q: -0.1% 4.15 4.19 3.09 3.23 2.44 2.53 2.45 2.43 1.36 1.42 1.39 1.37 1.08 1.11 1.06 1.06 Q3 2015 Q1 2016 Q2
Slide 12: Non fund based income held up well under challenging market conditions
Non fund based income held up well under challenging market conditions - higher insurance underwriting surplus and trading/investment income offset by lower Fx gain and fee income Y-o-Y: +6% RM’mil Non Fund Based Income 9M 9M Y-o-Y RM’mil 2016 2015 Change Y-o-Y: +23% 60 63 Fee Income – 228 358 388 -
Slide 13: Efficient cost transformation program continued to deliver positive results
Efficient cost transformation program continued to deliver positive results, maintaining cost-to-income ratio < 50% 11% personnel cost savings was partly offset by higher IT expenses as the Group continued to invest in technology capabilities and infrastructure Y-o-Y: -4% Y-o-Y: -4% 245 Q-o-Q: +2% 2
Slide 14: Asset quality impacted by classification of certain corporate accounts
Asset quality impacted by classification of certain corporate accounts Asset Quality RM’mil RM’mil 3.60% 4,700.0 0.38% 2.99% 3.10% 2.81% 400 0.4 0% 0.26% 0.21% 0.25% 0.21% 2.60% 0.16% 2.25% 4,200.0 350 0.2 0% 2.03% 2.03% 1.84% 1.88% 2.10% 300 3,700.0 0.0 0% 1.60% 1.66% 1.60% 1.65% 250 1.10% -0.20% 3
Slide 15: Total assets relatively stable; shareholders' funds increased
Total assets relatively stable; shareholders’ funds increased with completion of rights issue and internal reorganisation Change Balance Sheet Dec Sep for 9M 2016 RM’mil 2015 2016 % Total Assets 227,938 229,293 1 Total Financial Assets/ 46,897 44,301 -6 Investments - Financial Assets FVTPL 1,626 2,4
Slide 16: Loans growth driven by retail and SME
Loans growth driven by retail and SME, partly offset by corporate repayments, portfolio rebalancing showing steady progress Gross Loan Domestic Loans Market Share RM’bil Y-o-Y: +2% 9.7% 9.5% 9M Growth: +1% 9.3% 9.4% 9.2% Q-o-Q: +1% 154 .0 152 .0 150 .0 2012 2013 2014 2015 Sep 2016 Loans by Customer
Slide 17: We continue to exercise balance sheet discipline
We continue to exercise balance sheet discipline, pacing growth and focus on selected segments RM’mil 767 1 - 146 - 167 1,732 - 1,065 - 1,349 3,805 - 2,454 418 152,928 151,386 Dec 2015 Purchase of Purchase of Construction Credit Card Personal Purchase of Working Purchase of Purchase of Others Sep 20
Slide 18: Loans growth led by Business Banking
Loans growth led by Business Banking; growth in Retail supported by mortgages, partly offset by net repayment in auto financing & purchase of securities; Corporate loans impacted by several large corporate repayments; growth in GIB contributed by Singapore and Thailand Sep 2015 Composition Dec 2015
Slide 19: Healthy deposits growth
Healthy deposits growth - to support liquidity and ensure ample funding for business growth Customer Deposits CASA RM’bil RM’bil Y-o-Y: +10% Y-o-Y: +4% Annualised Growth : +10% Annualised Growth : +7% 40.7 38.0 170 .0 37.1 160 .0 9.1 8.4 8.5 150 .0 140 .0 166.0 130 .0 159.0 158.2 28.7 29.5 31.6 120
Slide 20: Funding sources well diversified
Funding sources well diversified. Benefited from rights issue proceeds; improvement in market share across all types of deposits Funding Composition Domestic Market Share 1% 2% 2% 2% 2% 2% 12% 11% 13% 10. 0% 9% 10% 8% 9.3% 9.3% 8.8% 9.0% 9.0 % 8.4% 8.7% 8.5% 8.0 % 8.5% 8.3% 8.2% 8.1% 8.0% 7.4% 7.4%
Slide 21: On normalised basis, all businesses except GIB reported profit growth
On normalised basis, all businesses except GIB reported profit growth. Excluding one off Singapore corporate bond impairment, GIB would have recorded PBT of RM87 million Pre-tax Profit Normalised - As Reported Pre-tax Profit 904 826 826 772 703 632 504 528 329 222 118 118 87 -167 -332 9M 2015 9M 201
Slide 22: Capital adequacy of Group and key banking subsidiaries remained strong
Capital adequacy of Group and key banking subsidiaries remained strong RHB Bank Group RHB Bank 20. 0% 20. 0% 15% 18. 0% 15% 18. 0% 16. 0% 16. 0% 11% 14. 0% 11% 14. 0% 12. 0% 12. 0% 7% 7% 10. 0% 14.7% 10. 0% 15.4% 8.0 % 13.3% 17.1% 3% 8.0 % 12.2% 13.3% 3% 6.0 % 10.6% 13.0% 6.0 % 10.3% 13.0% 4.0 % 10.
Slide 23: Corporate and Strategy Update
Executive Summary 3rd Quarter 2016 Financial Results Corporate and Strategy Update Summary and Outlook
Slide 24: We have made good progress across the initiatives under IGNITE 2017
We have made good progress across the 17 initiatives under IGNITE 2017 Retail Banking Increased premier wealth management sales by 11% since launch of RHB premier banking value proposition Launched proposition targeting Milennial segment – 808 bundles sold since launch Residential property loa
Slide 25: We will continue to execute our strategies anchoring on the 3 key themes
We will continue to execute our strategies anchoring on the 3 key themes Affluent segment strategy 1 • Launch Affluent mobile App in Q4 2016 • Improve sales productivity and ramp up customer acquisition Mass Affluent segment strategy 2 • Launch Online account opening bundled with incentives to enhan
Slide 26: Summary and Outlook
Executive Summary 3rd Quarter 2016 Financial Results Corporate and Strategy Update Summary and Outlook
Slide 27: Economic Outlook
Economic Outlook Malaysia’s GDP for 2016 is expected to grow between 4% to 5%, driven mainly by consumer spending, but partly offset by decline in net exports arising from the challenging global environment. Malaysian banking sector growth will remain modest. Corporate loans growth is expected t
Slide 28: Concluding Remarks
Concluding Remarks Our core earnings continued to demonstrate resilience amidst the weak economic conditions. We recorded strong pre-provisioning operating profit, though performance todate was affected by one large impairment on securities and impairment on certain corporate loan accounts. Im
Slide 29: www.rhbgroup.com
www.rhbgroup.com INVESTOR RELATIONS CONTACT: Ms Yap Choi Foong Group Chief Financial Officer +(603) 9280 2489 cfyap@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, financ
Slide 30: Key Business Highlights
APPENDIX Key Business Highlights
Slide 31: Retail
Retail Continuous emphasising on return on risk adjusted capital and focused growth in targeted market segment Mortgage Auto Finance RM’bil RM’bil Y-o-Y: +14% Y-o-Y: -15% 9M Growth: +10% 9M Growth: -12% 45. 0 12. 0 40. 0 10. 0 35. 0 30. 0 8.0 25. 0 41.7 11.2 6.0 20. 0 36.6 37.9 10.9 9.5 15. 0 4.0 10
Slide 32: CIB - Prominent market position
CIB - Prominent market position YTD Sep 2016 Ranking Market Share DCM Debt Capital Markets: Sarawak Hidro Sdn Bhd - MYR sukuk 2 21.3% RM5.54 bil Sukuk Murabahah issuance Joint Lead Manager - Total MYR bonds 3 18.3% (Conventional & Islamic Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA) bonds) RM4.0
Slide 33: Equities, Futures & Asset Management
Equities, Futures & Asset Management YTD Sep 2016 Asset Under Management Equities Market RM’bil Ranking Y-o-Y: +9% (by value) Share 9M Growth: +5% Malaysia - By value 7.8% 5th 54.9 52.0 50.1 - By volume 12.5% 3rd 8.1 7.0 8.2 Singapore 3.7% 13th Hong Kong 0.1% 91th 21.8 21.0 21.3 Indonesia 2.4% 16th
Slide 34: Business Banking and SME
Business Banking and SME Continued improvement in market share and asset quality RM’bil Gross Loans RM’bil Customer Deposits Y-o-Y: +11% Y-o-Y: +4% 9M Growth: +10% 9M Growth: +3% 21. 0 21.3 21.5 22.2 19. 0 17. 0 15. 0 12.0 12.3 12.2 13. 0 19.8 21.7 11. 0 19.6 10.0 9.0 7.0 9.3 9.2 5.0 Sep 2015 Dec 20
Slide 35: Islamic Financial Performance
Islamic Financial Performance Strong performance with enhanced contribution to the Group and increasing market share PBT Gross Loans RM’mil RM’bil Y-o-Y: +20% 350 Y-o-Y: +18% 9M Growth: +10% 40.0 300 35.0 250 30.0 200 25.0 349 34.2 150 304 299 20.0 28.6 31.1 254 100 209 218 15.0 10.0 50 Sep 2015 Dec
Slide 36: RHB Singapore - Affected by one-off impairment on a corporate bond
RHB Singapore - Affected by one-off impairment on a corporate bond and a weaker capital and financial market PBT Loans, Deposits & Total Assets SGD’mil SGD’bil 74 7.7 8.1 60 32 7.5 0.5 34 37 0.5 0.3 42 39 7.6 40 9 4 7.2 7.2 5.8 42 46 42 4.7 4.9 33 35 4.3 20 (68) 4.2 4.1 (5) - (12) (2 0) (4 0) (60) (