RASHID HUSSAIN BERHAD ("RHB") AND RHB CAPITAL BERHAD ("RHB CAPITAL") ANNOUNCE ANNUAL FINANCIAL RESULTS

• RHB Bank Berhad ("RHB Bank") reports profit before tax of RM228.0 million
• RHB Sakura Merchant Bankers Berhad ("RHB Sakura") sees strong fourth quarter improvement
• RHB Delta Finance Berhad ("RHB Delta") increases profit before tax to RM47.1 million

30 August 2002, Kuala Lumpur, Malaysia-RHB and RHB Capital today announced the Group's full year results for the financial year ended 30 June 2002. RHB and RHB Capital reported profit before tax of RM4.8 million and RM401.4 million respectively while RHB Bank and RHB Sakura, the Group's commercial and merchant banking subsidiaries, announced profit before tax of RM228.0 million and RM96.5 million respectively.

The decrease in profit before tax of RHB, RHB Capital and RHB Bank from the previous year was due to the decision to increase loan loss provisioning at RHB Bank in line with the higher level of non-performing loans ("NPLs"). This rise in NPLs was primarily due to the contraction in the global and regional economies which affected the business of many of the Group's corporate and manufacturing customers. Profits however, of RHB Delta and RHB Insurance Berhad improved during the year to RM47.1 million and RM23.7 million respectively due to strong growth in the business volume and revenue. RHB's two stockbroking subsidiaries, Rashid Hussain Securities Sdn Bhd and Straits Securities Sdn Bhd, achieved a significant turnaround in performance from a combined net loss of RM38.1 million last year to a profit before tax of RM8.7 million for the year ended 30 June 2002 following an improvement in trading on the Kuala Lumpur Stock Exchange and a reduction in costs.

The RHB Group's largest subsidiary, RHB Bank recorded a profit before taxation of RM228.0 million for the full year ended 30 June 2002 compared to RM465.7 million last year. Net interest income amounted to RM1.2 billion while non-interest income for the year was RM357.3 million, supported by higher fee income. Customer deposits increased to RM34.4 billion as at 30 June 2002 and gross loans and advances also increased to RM36.0 billion, representing a growth rate of 3.1% during the year.

The summary of the income statement of RHB B-ank for the year ended 30 June 2002 is as follows:-

Loan loss provisions totalled RM706.2 million for the year ended 30 June 2002 due to an increase in non-performing loans. The gross NPL ratio at 30 June 2002 was 15.7% while the net NPL ratio was 9.3%. Despite the increase in NPLs, provision coverage for NPLs remained healthy at 55.3% and at 125.5% inclusive of collateral coverage as at 30 June 2002.

The underlying business of RHB Bank remains strong and operating profit for the year before provisions was maintained at above RM930 million. As a result of the strength of its core underlying businesses, RHB Bank's risk weighted capital adequacy ratio improved from 12.5% last year to 12.7% as at 30 June 2002 and remains one of the strongest in the industry despite the higher amount of provisions for the year. Shareholders' funds also rose to RM4.7 billion making RHB Bank one of the highest capitalised banks in Malaysia.

"We've made significant headway in our growing consumer banking business of RHB Bank where loans increased for the year ended 30 June 2002 by 17%. Further growth is expected by maximizing sales channel effectiveness and complementing the existing products and services offered to customers to generate cross selling activities across the RHB Group. These include third party unit trusts, bank assurance and financial planning. Delivery channels will become more efficient through greater use of RHB Bank's call centre, internet banking and self-service machines at the more than 180 branches nation wide," said Mr. Michael Hague, Chief Executive Officer of RHB Bank.

RHB Bank continues to emphasize its contribution from non-interest income from fee-based products, trade, foreign exchange and cash management services. Skim Perbankan Islam which currently represents 6% of the total domestic business is expected to continue to be an area of growth for RHB Bank.

RHB Sakura reported profit before tax of RM96.5 million for the year ended 30 June 2002, a slight decrease compared to RM103.1 million for the previous year. However, fourth quarter performance rose strongly compared to the previous quarter in line with the improvement in fee and investment income. RHB Sakura's risk weighted capital adequacy ratio also improved to 27.1% as at 30 June 2002 from 25.6% last year, making it still one of the strongest merchant banks in the country. Shareholders' funds of RHB Sakura increased to RM748.0 million as at 30 June 2002.

RHB Delta recorded a profit before tax of RM47.1 million for the year ended 30 June 2002, an increase of 69% over the contribution to the Group in the previous year. Loans grew by more than 36.0% to RM1.4 billion as at 30 June 2002 and loan quality was good with gross and net NPL ratios of 10.2% and 2.8% respectively. RHB Delta's risk weighted capital adequacy ratio as at 30 June 2002 was 14.0%.

"The reporting year proved challenging given the economic conditions and extreme volatility in the capital markets that impacted the global and regional economies post September 11. However, despite the adversities, operating profit before provisions across the RHB Group was satisfactory. We have put several initiatives in place across the Group to maintain and enhance our strong underlying fundamentals to deliver value to all our shareholders and to support future growth for the RHB Group," said Tan Sri Abdul Rashid Hussain, Executive Chairman, RHB.

The institutionalisation of the shareholding structure of RHB, the Group's parent company, through the sale of shares by Tan Sri Abdul Rashid Hussain to the Utama Banking Group Berhad will enable the RHB Group to move forward with the necessary strength to continue to be a dominant player in the Malaysian financial services industry.

As well, the Board of Directors of RHB Bank made the decision to appoint a new Chief Executive Officer for RHB Bank to transform the operations and strengthen the bank to support future growth. RHB Bank took decisive action to increase provisions for the non-performing loans due to previous significant exposure to the corporate and manufacturing sectors. This sector was dependent upon exports and the US economy which was in recession during this reporting year.

"RHB Bank continues to pursue recovery and remains diligent and focussed on building and strengthening the business through the implementation of its long-term business plan to support future growth. This includes a primary focus on consumer banking to strengthen RHB Bank's risk profile and improve margins, Islamic banking, treasury and fee based activities and an overall enhancement of the credit policies and procedures," said Mr. Michael Hague, Chief Executive Officer of RHB Bank.

RHB Sakura's prospects are dependent upon market conditions but should see an improvement in line with continued development and growth of the Malaysian capital markets. RHB Sakura lead managed two of the largest initial public offerings in Malaysia in 2002, Maxis Communications Berhad and PLUS Expressways Berhad.

"As we look toward the new year, we will further streamline our business operations to enhance productivity and efficiencies. Performance across the Group is expected to improve for the current financial year in line with the economic growth and improvement in Malaysia as well as the implementation of the necessary strategies to strengthen the RHB Group," said Tan Sri Abdul Rashid Hussain.

Issued by RHB Public Affairs & Communications. For further information, please contact Celina May Ong at Tel:03-92802535.