RHB Capital Profits Up 97% for FY 2003 - RM 250.6 million in Net Profit almost double from last year

Kuala Lumpur, 28 August 2003-The RHB group of companies announced today the financial performance for the year ended 30 June 2003 . In brief:

• Net profit at RHB Capital Berhad nearly doubles to RM250.6 million from RM127.0 million in the previous financial year, due to:

• An increase of 30% in pre-tax profits to RM521.5 million

• A rise in non-interest income of 19% to RM657.6 million, while income from Skim Perbankan Islam (‘SPI’) operations, or "Islamic Banking", jumps 49% to RM105.0 million

• An expansion in loans, advances and finance to customers of 12% to RM42.4 billion

• Improvement in asset quality as net Non-Performing Loans ratio declines to 8.5% from 9.5% as at June 2002

• Stronger performance by RHB Bank due to better operating efficiencies, improvement in risk management, and marketing initiatives, particularly in consumer banking

• Overall, prospects for stronger financial performance look positive as full benefits of the merger and other strategic initiatives are likely to yield results in a recovering economic climate

RHB Capital’s near-double net profit for Financial Year 2003 is especially notable in the second half of the financial year, registering a 23% improvement from the first half.

The Group’s sturdy financial performance is bolstered primarily by improvements in : (i) non-interest income earned by the Group; and (ii) growth in income from Skim Perbankan Islam (‘SPI’) operations.

1. RHB Capital’s non-interest income in the fourth quarter increased to RM215.5 million, or 41% higher than the previous corresponding period. The Group has succeeded in capitalising on trading opportunities for fixed income instruments in the declining interest environment and made higher gains from the disposal of investment and dealing securities. The Group’s financial advisory, underwriting, asset management, unit trust and other securities related business also performed strongly and generated total revenue amounting to RM88.0 million. For the financial year under review, the Group’s non-interest income improved 19% to RM657.6 million.

   The Group is implementing measures to sustain and enhance its non-interest income generation via new product initiatives and core treasury income. Additional avenues include the cross-marketing and selling of non-banking and financial products and integrated financial solutions to its expanding client base.

2. Income from Skim Perbankan Islam (‘SPI’), more popularly described as "Islamic Banking", grew steadily to RM35.2 million in the fourth quarter, more than double the RM16.6 million achieved in the previous corresponding period. For full FY2003, income from SPI operations jumped 49% to RM105.0 million.

RHB Capital’s pretax profit before INCPS dividend improved 30% to RM521.5 million for the financial year, with its strong financial performance attributed largely to its commercial banking operations. RHB Bank’s profit before INCPS dividend, taxation and zakat of commercial banking operations surged 80% to RM410.3 million. Non-interest income was boosted by the active bond market while loan loss and provisioning was reduced with improvement in the Bank’s asset quality.

Earnings contribution from the Group’s commercial banking operations is expected to improve as the full benefits of the Group’s loan portfolio expansion in the second half of the financial year just ended are to be realized only in FY 2004.

The Group’s net loans and advances to customers expanded by 12% to RM42.4 billion in financial year 2003, with the merged RHB Bank-Bank Utama entity having an enlarged net loan portfolio of RM38.1 billion. Moreover, RHB Bank’s consumer banking marketing initiatives are beginning to yield positive results as the Bank experienced a gross loan portfolio expansion in the second half of FY2003. RHB Bank, at the same time, has also implemented new risk management measures to strengthen the Bank’s risk profile and enhance the quality of existing and new credit being underwritten.

RHB Bank will continue to focus on enhancing its competitiveness in Consumer Banking, Commercial Banking and Corporate Banking with innovative products and cross-selling initiatives within the Group. Most recently, RHB Bank launched the RHB EVO MasterCard credit card, Malaysia’s first such card with an embedded palladium chip. In addition, to capitalize on synergies, the Corporate Banking Division works closely with RHB Sakura Merchant Bankers Berhad on capital market activities.

On asset quality, RHB Capital showed significant improvement as the net Non-Performing Loans (‘NPL’) ratio declined to 8.5% in financial year 2003 from 9.5% in 30 June 2002, reflecting the positive results arising from the new risk management measures that have been implemented. The Group adopted a prudent approach in its loan loss and provision in the final quarter, making an allocation of RM190.7 million. For the financial year, RHB Capital’s loans which turned non-performing was lower by 38% to RM2.8 billion (as compared to RM4.5 billion in FY 2002) whereas NPL that were reclassified as performing increased by 36% to RM1.5 billion (as compared to RM1.1billion in FY2002).

RHB Capital’s NPL ratio improvement reflected the completion of various corporate debt restructuring proposals as well as the initial results of the implementation of the New Credit Framework..

Overall

The prospects are positive for further improvement in the Group’s operations and financial performance. Benefits of RHB Capital’s acquisition of Bank Utama as well as the results of the Group’s ongoing credit and marketing initiatives should further be realised in FY2004. With the group’s bigger geographical network of outlets and customer segments, opportunities are vast for cross-selling of integrated solutions & products.

"Our net profits nearly doubled in a year which saw some hiccups in operations...as you can well expect with a merger of this magnitude...but our customers and shareholders should rest assured that the issues are being addressed, and that we will be very competitive in this upcoming year," said Dato’ Sri Sulaiman Abdul Rahman Taib."

Audited Consolidated Results FY 2003 for RHB Capital Berhad and Rashid Hussain Berhad are accessible @ www.rhb.com.my after midnight Aug 28 , 2003. For easy reference, a table of financial highlights for RHB Capital Berhad follows:

This release contains forward-looking statements such as the outlook for the RHB group of companies. Although RHB believes that the expectations reflected in such future statements are reasonable at this time, there can be no assurance that such expectations will prove correct. Actual performance may be materially different from that anticipated or described herein, and RHB’s financial and business plans may be subject to change.