RHB Capital Berhad and Rashid Hussain Berhad Announce Profit Before Tax of RM 621.5 million and RM 267.7 million respectively for the financial year ended 30 June 2001.

• RHB Bank Berhad ("RHB Bank") records profit before tax of RM 465.7 million
• RHB Sakura Merchant Bankers Berhad (RHB Sakura) records profit before tax of RM 103.1 million

Kuala Lumpur, 29 August, 2001- RHB Capital Berhad ("RHB Capital) and Rashid Hussain Berhad ("RHB") today announced profit before tax of RM 621.5 million and RM 267.7 million respectively for the financial year ended 30 June, 2001.

Although net interest income was higher than last year in line with the growth in loans and advances by 11.4% during the year, profit before tax of RHB Capital and RHB were lower. This was due primarily to the higher provisions made by RHB Bank which reflected the increase in the level of non-performing loans particularly in the last quarter of the financial year and the significant reduction in dealing revenue in Rashid Hussain Securities Sdn Bhd, Straits Securities Sdn Bhd and RHB- Cathay Securities Pte Ltd caused by lower trading volume and reduced brokerage rates on the Malaysian and Singapore stock markets although the market share of the Malaysian securities companies improved during the year.

The reduction in Group profit was, however, mitigated by the favourable contribution of RM 27.8 million from RHB Delta and the strong performance of RHB Leasing Sdn Bhd which achieved a profit before tax of RM 38.4 million during the year. Both the finance and leasing subsidiaries enjoyed healthy interest margins coupled with a low level of non-performing accounts. Total consolidated assets of RHB Capital and RHB grew by 3% to RM 57.1 billion and RM 58.5 billion during the year. Shareholders' funds of RHB Capital improved to RM 3.5 billion from RM 3.3 billion last year.

RHB Bank Berhad RHB Bank recorded a profit before tax of RM 465.7 million for the year ended 30 June 2001. Non-interest income for the Bank grew by 19.3% to RM 372.6 million due primarily to higher income from dealing in investment securities. Margins were maintained as a result of the Bank's proactive funding strategy despite declining pricing in the market. Overall, total gross loans grew by 7.2% to RM 35.8 billion.

The Bank showed steady performance at the operating profit level with its Commercial business registering a 17% loans growth for the financial year under review while its Consumer business showed a loans growth of 6.2%. Housing loans grew 10.3% over the year ended and market share of Current and Savings deposits also improved. The Bank sees greater potential in this area given on going efforts to further leverage business opportunities via the Bank's extensive branch network across the country. The Bank's Corporate business, however, declined by 2.3% given the weak loan demand and increasing refinancing by customers through the bond market.

Loan loss and provisioning increased due to the accelerated ammortisation on accounts sold to Danaharta as well as higher provisioning to take into account the increase in non-performing loans during the year. The Bank's net NPL ratio as at 30 June 2001 was 6.7 % compared to 3.2 % last year. This, however, remained below the industry average. Provision coverage on NPLs was 59.5% and 129.5% inclusive of collateral coverage as at 30 June 2001, higher than the industry average of about 50%.

The Bank's risk weighted capital adequacy ratio (RWCR) remained strong at 12.5%, which was also above the industry average.

RHB Sakura Merchant Bankers Berhad RHB Sakura recorded a higher operating profit before provision of RM 138.7 million compared to RM 119.2 million for the preceding year ended 30 June 2000. Profit before tax also increased to RM 103.1 million. However, the increase was offset by an increase in the loan and financing loss and provision from RM 17.9 million to RM 35.7 million for the financial year ended 30 June 2001.

Non-interest income increased by 32% from RM 72.2 million to RM 95.6 million this year due largely to higher income from trading of fixed income instruments and corporate finance activities.

RHB Sakura's risk-weighted capital adequacy ratio remains one of the strongest in the industry at 25%, an increase over the 22.4% recorded in the last financial year.

RHB Group Comments on Future Prospects
In view of the current economic environment and future business challenges, the RHB Group has put in place various strategic measures to drive change and transform its business operations. The Group has made significant investment in strengthening its IT capabilities and has installed state of the art technology facilities as part of a new business thrust by RHB Bank in the area of e-banking and customer relationship management. The Group is also focussing on accelerating cross-selling opportunites involving key subsidiaries such as RHB Bank, Rashid Hussain Securities, RHB Unit Trust and RHB Insurance harnessing the strengths of the Group as an integrated financial services provider.

RHB Bank has embarked on a five year strategy and a Transformation roadmap to reinvest in a business model that will see improved efficiency and a new culture for high performance leveraging on new technologies and quality customer sales and service as well as the establishment of an integrated risk management framework.

Prospects for RHB Sakura remain challenging and would depend on market conditions. The merchant bank will continue to emphasise risk management and non-interest income through its advisory and trading activities.

The RHB Group looks forward to a year of further consolidation in its efforts to increase productivity and efficiency across its core subsidiaries, anticipating improvement in the economy and better market conditions.

Note to Editors: The announcement of the audited consolidated results for RHB, RHB Capital and RHB Sakura Merchant Bankers can be viewed on the KLSE website. Email copies of the announcement will be sent to the media on request. Please contact RHB Public Affairs and Communications.

Issued by RHB Public Affairs & Communications. For more details, please contact Celina May Ong at Tel 03-9802534 content