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KUALA LUMPUR: RHB Bank Bhd sees a challenging investment banking business scenario overseas, which is lacking in scale compared with the business in Malaysia, and it will adopt a “pragmatic” approach to address the challenges.
“That’s why we believe that, based on our FIT22 strategy, we focus on our niche and strength. Take for example in Singapore, we will do equities business, we will do investment banking business but we will not do debt market business because we don’t have the capability for distribution there and particularly in foreign currencies. And of course the bonds mainly in Singapore are not rated. But we will do the others,” said group managing director Datuk Khairussaleh Ramli (pix).
“In Thailand for example, we believe the equities business is very active, the retail broking there is among the most active in Asean, so that’s an area that we will focus on, including maybe some debt market as well,” he told reporters at its AGM today.
He said the investment banking businesses in Indonesia and Thailand have room to expand via organic growth while in Singapore, the group intends to synergise its investment banking and banking businesses in order to offer multiple services to clients.
In terms of its asset management business in Indonesia, Khairussaleh said the business is small and the main challenge there is distribution due to the country’s size.
“We have tied up with some banks but we also want to look at digital ways of distributing our products, because it is such a big country with many islands. If we can’t have physical presence, we need to look at digital capabilities,” he said.
“For our overseas business we take a pragmatic approach of focusing on our niche but in Malaysia, we pretty much are a universal investment bank, we pretty much do everything. Generally in Malaysia, the investment banking business is good,” he added.
RHB expects to take on several initial public offerings (IPOs) this year in the consumer product and trading services segments, including Leong Hup International Bhd and two sizeable IPOs of about RM750 million each in the second half of the year.
The group is one of the joint global coordinators for the IPO of poultry player Leong Hup, which is en route to list on the Main Market of Bursa Malaysia. The prospectus will be launched today.
Meanwhile, RHB aims to grant RM31 billion in new and additional financing for small and medium enterprises (SMEs) by 2021, which will benefit 18,000 SMEs. Last year, it approved RM7.2 billion worth of loans to over 4,000 SMEs in Malaysia.
The bank is currently ranked fourth in the SME segment with a market share of 9.06% as at January. Its market share was about 7% three to four years ago. It aims to connect to 15,000 new SMEs this year through its SME Ecosystem.
RHB aims to grow its mortgage business by 12% this year and 33% or RM17.5 billion over the next three years. Its mortgage market share stood at 9.64% as at February.
Khairussaleh said mortgage applications have reduced but its approval rate has been consistently high at 75%. He said there are no changes to its overall loans growth target of 5% for this year, driven by growth in the mortgage and SME segments.
In terms of provisions, he said it will be decided on a case-by-case basis and while some clients may be going through a difficult patch, there are no systemic issues at the moment.
“We believe that our oil and gas portfolio is under control. But again, potentially there could be case-by-case basis where customers may go through some difficulty. That’s where we should help. In fact, our oil and gas loan loss coverage is more than 100% so we are comfortable with our coverage for the current portfolio,” he said.
RHB’s exposure to the oil and gas sector is 2.8% of its total loan book, with 6% exposure to the property sector.
