RHB Bank profit up 18.4% to $138.84m in Q3

Net interest income rose 5%.

RHB Bank extended its double-digit earnings growth of 18.4% YoY and 1.5% QoQ to $138.84m (RM578.6m) in Q3 on the back of rising net interest income, according to UOB Kay Hian.

The quarterly profits increase was boosted by loan growth which rose 4% and a consequent expansion in net interest margin which expanded 4bp. Bank earnings were also lifted by a 44% decline in provisions from higher recoveries as well as the absence of O&G related provisions which impacted provisions in Q3 2017.

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“The group managed to sustain a positive operating JAW in 3Q18 on both a yoy and qoq basis, leading to a further improvement in cost-to-income ratio to 48.9% vs 2Q18’s 49.4% and 3Q17’s 50.1%. We have penciled in a relatively stable cost-to-income ratio assumption of 49.4% and 48.6% over 2018 and 2020,” analyst Alexander Margaronis said in a report.

Gross impaired loan (GIL) ratio inched up mildly by 4bp to 2.37% in Q3 but credit costs remained benign and loan loss coverage (LLC) ratio held stable at 104.2%.