RHB still keen to enter Indonesia

KUALA LUMPUR: RHB Bank Bhd, which saw net profit for the second quarter ended June 30, 2016 fall 37% to RM350.17 million, will continue to look for opportunities in Indonesia with a recently inked agreement between the financial regulators of Indonesia and Malaysia that allow banks greater access to each other's jurisdiction.
RHB group managing director Datuk Khairussaleh Ramli said it is excited with the higher return on equity and net interest margin in Indonesia, compared with Malaysia.
"We've to look at it from an opportunistic point of view, given the regulatory provision now that is welcoming and obviously we need to find something that is right for us at the right price, right time. It's something that we have to evaluate if the opportunity comes," he told a press conference after announcing the group's financial results for the first six months of 2016 here yesterday.
Khairussaleh was based for a year in Indonesia, during his stint with Malayan Banking Bhd (Maybank), in 2012-2013.
With RHB's market capitalisation at about RM20 billion, he said, the group needs to find something it can manage.
RHB aborted a plan to acquire a 40% stake in Indonesia's Bank Mestika last year, after a five-year pursuit.
Under the Asean Banking Integration Framework, three Malaysian banks are allowed to open branches in Indonesia. Maybank and CIMB Group Holdings Bhd are already operating in Indonesia.
Meanwhile, RHB is looking at a 4%-5% loan growth for this year, a decent target, Khairussaleh said, given the current situation. An earlier target of 8% loan growth is not achievable, he added.
"We'll be looking at the quality of growth and not just the numbers. We don't anticipate any further OPR (Overnight Policy Rate) reduction this year as we're expecting the US to increase interest rates and there is no major sign for further interest rate reduction (in Malaysia)," he said.
Khairussaleh said the second half of 2016 will continue to be challenging as macro-economic uncertainties in most parts of the world will not spare Malaysia from the headwinds. The local banking sector growth is expected to remain modest, attributable to a deceleration in corporate loans market and ongoing consolidation of household loans sector.
A softer financial and capital market, and rising pressure on liquidity and asset quality will also weigh on the performance of banks, he added.
RHB's net profit for the second quarter ended June 30, 2016 fell 37% to RM350.17 million from RM559.03 million a year ago due primarily to impairments made for a corporate bond in Singapore. Revenue jumped 1% to RM2.69 billion compared with RM2.65 billion in the previous year's corresponding quarter.
For the six months, RHB's net profit fell 15% to RM915.05 million from RM1.07 billion in the previous corresponding period, also due to the one-off full impairment on a corporate bond in Singapore. Revenue rose marginally to RM5.43 billion from RM5.38 billion in the previous year's corresponding period.