PETALING JAYA: With a new chief onboard, RHB Banking Group is realigning itself via a new three-year plan to promote a more robust performance and accelerate its digital journey.
Called Together We Progress 24 (TWP24), the new corporate strategy is necessary as the banking group faces heightened market agility and fast-changing customer needs, according to managing director and CEO Mohd Rashid Mohamad.
Mohd Rashid succeeded former CEO Datuk Khairussaleh Ramli, who left to Malayan Banking Bhd, effective April 1.
Under TWP24, Mohd Rashid said RHB aims to become “everyone’s primary bank” through personalised value propositions.
“We will prioritise customer experiences and deliver market-leading services.
“We will also deliver on ‘quality growth’ by focusing on where we have the ‘right-to-win’,” he told reporters during a briefing yesterday.
The TWP24 plan, which will be effective from 2022 to 2024, has outlined a number of key targets.
These include financial targets namely, a return on equity of 11.5% and a cost-to-income ratio of 44.5% or below by 2024.
Managing director and CEO Mohd Rashid Mohamad said RHB aims to become “everyone’s primary bank” through personalised value propositions.
Under the digital, information technology and analytics targets, RHB wants to modernise 65% or more of its systems, automate 50% or more of its processes and achieve over 95% digital transactions by 2024.
Meanwhile, on the sustainability agenda, RHB seeks to mobilise RM20bil in sustainable financial services, reach financial inclusion by empowering two million people across Asean by 2026 and become carbon neutral by 2030.
“The group has reassessed and reprioritised a number of our key initiatives in order to address the accelerated shifts in customer behaviour and preferences especially over the last couple of years.
“In paving the way towards the implementation of TWP24, we have recently strengthened the group’s management bench through internal movements and expansion in roles of certain key existing senior management members.
“This will ensure greater focus in driving key growth areas, accelerating the group’s digital journey towards transforming customer experience,” said Mohd Rashid.
The TWP24 is anchored against seven focus areas which is, be the primary financial services provider, integrate into key Islamic ecosystems, build an integrated overseas business, catalyse sustainability, employ cutting edge technolog, develop a future-ready workforce and accelerate intelligent banking services
Mohd Rashid said that RHB will focus on “pushing the right product to the right customers.”
This will be achieved via digital innovations such as artificial intelligence.
CLICK TO ENLARGE
“We have identified all the touch-points that we believe can be improved. We are progressively addressing the touch-points and issues,” he added.
Yesterday, RHB also announced its financial results for the first quarter ended March 31, 2022. The results took a hit in the quarter due to lower non-fund based income.
Its net profit dropped by 7.69% year-on-year (y-o-y) to RM600.27mil compared with RM650.29mil in the previous corresponding quarter.
The bank reported revenue of RM2.86bil, a 1.6% y-o-y decline from RM2.9bil a year earlier.
RHB acknowledged the challenging business environment but noted its strong capital ratio and liquidity levels.
“Going forward, we will remain prudent in managing the business and will focus on driving responsible growth, as well as managing our asset quality.
“We will also continue to provide the appropriate assistance to our customers who remain impacted by the Covid-19 pandemic,” said Mohd Rashid.
In the first quarter, RHB’s net fund-based income improved to RM1.47bil, while gross fund-based income rose 2.7% on the back of a 7% loan growth.
Net interest margin for the quarter was 2.11% compared with 2.17% in the same quarter in 2021.
Meanwhile, non-fund-based income declined to RM432.7mil, primarily from lower fee income and net trading and investment income, offset by higher insurance underwriting surplus.
Operating expenses declined to RM859.1mil.
RHB said its cost-to-income ratio improved to 45.1% compared with 46% a year ago.
On asset quality, RHB noted that its Common Equity Tier-1 and total capital ratio stood at 16.8% and 19.4% respectively.
The group’s gross loans and financing grew by 1.4% to RM201.3bil, mainly supported by growth in mortgage, small and medium enterprises as well as Singapore.
Domestic loans and financing grew by 1%.
Gross impaired loans was RM3bil, with a gross impaired loans ratio of 1.5% compared with 1.49% as at December 2021.
The loan loss coverage ratio excluding regulatory reserves strengthened to 125.7% as at end-March 2022 from 122.4% in December 2021.
Customer deposits increased 3.6% to RM226.5bil, predominantly attributed to fixed and money market time deposits growth of 5.1%.
Meanwhile, the liquidity coverage ratio remained healthy at 144.8%.
Commenting on the bank’s loans growth target for 2022, Mohd Rashid projected a growth of 4% to 5%.
However, he acknowledged that the forecast was lower than the total industry’s loans growth target of 5.2% in 2022.
“That (the lower target) is in anticipation of some of the uncertainties. So, we believe that growing 4% to 5% is more realistic at this juncture.
“Inflation and the overnight policy rate hikes will have an impact, but I believe that with the continuous growth in the economy, it will neutralise (the impact),” according to Mohd Rashid.