RHB’s Q1 FY2025 Performance: Navigating Growth Amidst Evolving Dynamics
Malaysia’s financial landscape is always dynamic, and the latest first-quarter financial year 2025 (1Q FY2025) report from RHB Bank Berhad offers a compelling look into one of its leading institutions. This report isn’t just a collection of numbers; it’s a testament to RHB’s strategic resilience and disciplined execution in an ever-evolving market. We’re here to break down the core highlights, from their impressive profit growth to their strategic outlook, helping you understand what drives this financial giant.
The headline? RHB sustained its earnings momentum, registering a net profit of RM750.0 million, a notable 2.7% increase year-on-year. This positive trajectory, underpinned by strong fundamentals and proactive management, sets an optimistic tone for the quarters ahead. Let’s dive deeper into the specifics.
Core Data Highlights: A Closer Look at RHB’s Performance
Overall Financial Performance
RHB’s first quarter saw a solid performance, primarily driven by growth in its core lending activities and improved credit risk management. While total income saw a marginal dip, the underlying strength in net fund-based income and significant improvement in credit costs paint a positive picture.
1Q FY2025
- Net Profit: RM750.0 million
- Net Fund-Based Income: RM1.5 billion
- Total Income: RM2.0 billion
- Operating Expenses: RM970.7 million
- Expected Credit Losses (ECL): RM105.8 million
1Q FY2024
- Net Profit: RM730.2 million
- Net Fund-Based Income: RM1.4 billion
- Total Income: RM2.04 billion
- Operating Expenses: RM959.2 million
- Expected Credit Losses (ECL): RM215.1 million
Net Profit Growth: RHB’s net profit climbed 2.7% year-on-year to RM750.0 million. This was primarily fueled by a 7.3% year-on-year increase in net fund-based income, reaching RM1.5 billion, along with a significant 50.8% reduction in Expected Credit Losses (ECL) to RM105.8 million, largely due to the absence of one-off ECL for International Business.
Cost Management: The Group demonstrated prudent cost management, with operating expenses contained at a modest 1.2% year-on-year growth. However, the cost-to-income ratio (CIR) slightly increased to 47.4% from 45.9% a year ago, reflecting the marginal contraction in total income.
Strong Balance Sheet and Capital Position
RHB continues to boast a robust financial foundation, evident in its healthy balance sheet growth and strong capital ratios. These elements are crucial for supporting future growth ambitions and cushioning against macroeconomic uncertainties.
| Balance Sheet Indicator | As at 31 March 2025 (RM million) | As at 31 December 2024 (RM million) |
|---|---|---|
| Total Assets | 352,537 | 349,915 |
| Gross Loans | 239,158 | 237,758 |
| Customer Deposits | 248,520 | 249,565 |
| Equity attributable to equity holders | 32,216 | 32,492 |
Asset and Loan Growth: Total assets expanded to RM353 billion. Gross loans grew 2.4% annually to RM239 billion, with domestic loans outpacing the industry at 4.7% annualised growth (industry: 4.3%). This was significantly driven by strong momentum in the Group Community Banking (+5.5%) and Commercial segments (+16.9%).
Asset Quality: The Gross Impaired Loans (GIL) ratio remained well-contained at 1.50%, with the domestic GIL ratio at 1.22%, which is lower than the industry average of 1.42%. Loan loss coverage, including regulatory reserves, improved to 115.7%, reflecting sound provisioning practices.
Capital and Liquidity: RHB maintains a strong capital position with a Common Equity Tier-1 (CET-1) ratio of 16.0% and a Total Capital Ratio (TCR) of 18.5%. Customer deposits stood healthy at RM249 billion, and the Current Account Savings Account (CASA) composition improved to 28.0% from 27.6% in FY2024, indicating stable and lower-cost funding. The liquidity coverage ratio (LCR) remained sound at 134.6%.
Business Segment Performance
Each business segment contributed to the Group’s overall performance, with some showing significant improvements:
- Group Community Banking: Pre-tax profit surged by 14.7% year-on-year to RM425.7 million, largely due to higher net fund-based income and lower ECL. Gross loans grew 5.5%, driven by mortgages, auto finance, and Middle Market SME.
- Group Wholesale Banking: Reported a pre-tax profit of RM548.2 million, with gross loans up 2.3%, primarily from the Commercial segment.
- Group International Business: Achieved a pre-tax profit of RM87.3 million, an increase of over 100% year-on-year, primarily due to lower ECL.
- Group Shariah Business: Maintained a healthy contribution with a pre-tax profit of RM242.5 million and gross financing growth of 8.7%. Islamic business now contributes 45.1% of the Group’s total domestic gross loans.
Risk and Prospect Analysis: Navigating the Future
RHB maintains a stance of cautious optimism for the road ahead. The macroeconomic environment, influenced by interest rate movements and global trade dynamics, remains a key factor. However, the recent reduction in the Statutory Reserve Requirement (SRR) by Bank Negara Malaysia is a positive development, expected to provide funding flexibility in the upcoming quarters.
Dato’ Mohd Rashid Mohamad, Group Managing Director/Group Chief Executive Officer of RHB Banking Group, highlighted the importance of their new 3-year strategic roadmap, “PROGRESS27.” This strategy aims to solidify RHB’s position as a leader in service, enhance profitability, and reinforce its purpose-driven commitment. With focused execution priorities ranging from simplifying customer journeys to advancing sustainability ambitions, RHB is positioning itself to deliver both near-term and long-term value for all stakeholders.
Summary and Outlook
RHB’s first-quarter performance for FY2025 showcases a financial institution that is not only resilient but also strategically positioned for growth. The increase in net profit, driven by robust net fund-based income and effective credit risk management, underscores the Group’s sound fundamentals. While facing a marginal dip in total income due to non-fund based income contraction, the Group’s ability to contain costs and improve asset quality speaks volumes about its operational discipline.
The strong capital and liquidity positions, coupled with outperforming domestic loan growth, provide a solid foundation for future expansion. The “PROGRESS27” strategy outlines a clear path forward, emphasizing enhanced profitability, service excellence, and sustainability. As the Group navigates evolving macroeconomic conditions, its disciplined approach and strategic roadmap are crucial for sustained success.
Key areas to watch for RHB moving forward include:
- Continued management of macroeconomic conditions, particularly interest rate movements and global trade dynamics.
- Monitoring the cost-to-income ratio to ensure it remains optimized despite income fluctuations.
- Maintaining strong asset quality and managing the Gross Impaired Loans ratio effectively in a dynamic economic environment.
Final Thoughts
From a professional perspective, RHB’s Q1 FY2025 report demonstrates a bank that is actively managing its core business while strategically planning for the future. The emphasis on contained cost growth and improved credit quality, alongside a clear strategic roadmap, reflects a prudent yet ambitious approach. The slight increase in the CIR and GIL ratio are points to monitor, but the overall trend remains positive, especially with the strategic initiatives under “PROGRESS27” beginning to gain traction.
Do you think RHB can maintain this growth momentum and successfully execute its “PROGRESS27” strategy in the coming years? Share your thoughts in the comments below!
For more in-depth analyses of Malaysian companies, check out our related articles on [Link to related article 1] and [Link to related article 2].
