RHB Bank Bhd, which saw its bid to acquire a stake in Indonesia’s PT Bank Mestika Dharma Tbk fall through, is optimistic about the prospects in that country and and will assess the opportunities.
Group Managing Director, Datuk Khairussaleh Ramli, said the Indonesian market was good with banks recording stronger credit growth and higher return on equity compared to Malaysia’s.
It has been reported that, on average, an Indonesian bank’s return on investment was between 15% and 20% compared with Malaysia’s 9) and 11%.
“(However) at this point there is nothing on the table for us to look at and when it does we will have to evaluate the opportunity,” he said after announcing RHB Bank’s first-half 2016 financial results here on Wednesday.
He said the recent bilateral agreement signed between Indonesia Financial Services Authority (IFSA) and Bank Negara Malaysia would pave the way for banks to have greater access in both countries.
In 2009, RHB Bank, which was then the banking unit of RHB Capital Bhd had, proposed to acquire 80 per cent of PT. Bank Mestika Dharma Tbk for RM1.16 billion but IFSA’s move to limit the foreign ownership to 40 per cent emerged as a stumbling block for the deal to be signed.
The second bid to acquire a 40% stake, also fell through after RHB Capital did not get the Indonesian authorities’ approval before the deadline of the sales and purchase agreement on June 30, 2014.
Also under its own corporate exercise, on April 14, 2016, RHB Bank emerged as the new group’s holding company and it was listed on Bursa Securities on June 28, 2016.
For the first half-year ended June 30, 2016, its pre-tax profit fell by 12.7% to RM1.22bil due to a one-off impairment on a corporate bond in Singapore. For the first-half of 2015, it reported a pre-tax profit of RM1.40bil.
Revenue for the six months of 2016, however, rose to RM5.42bil from RM5.37bil.
Khairussaleh said the financial market would remain challenging due to the macro-economic uncertainties in most parts of the world.
“The risks of external demands and softer consumer sentiments are expected to moderate Malaysias gross domestic product growth in 2016 to 4% from 5% last year.
“The banking sector growth too is expected to remain modest, attributable to a deceleration in corporate loans market and ongoing consolidation of household loans sector,” he said.
He said although the bank’s performance in the second quarter was affected by one large impairment on securities, RHB was on track to achieve its long-term objectives set under the reframed strategy of focusing on performance.
For the second quarter ended June 30, 2016, pre-tax profit stood at RM469.33mil, down from RM724.9mil a year ago. Revenue increased to RM2.68bil from RM2.65bil previously.
“The group will stay on course in executing the various initiatives under its transformation programme, while continuing to be vigilant amid a challenging macro environment and volatility in the market place,” he said.