KUALA LUMPUR: RHB Capital Bhd (RHB Cap) wants to grow its small and medium enterprises (SME) loans business as it believes that this segment would provide long-term stability.

Group managing director Datuk Khairussaleh Ramli (pic) said the SME segment, which currently accounted for around 15% of RHB Cap’s loan business, “still had potential to grow.”

“We want to grow our SME business a bit more, maybe to 20%. Our corporate loans (which stood at 27% in 2015), we might want to reduce to between 22% and 23%,” he said at a media briefing on the bank’s results yesterday.

“We need to reflect the entire economic breakdown, and SMEs comprise a large part of the economy. While corporate loans may be big, they tend to be one-off and we’re looking for something a bit more sustainable.”

RHB Cap’s gross loans grew 6% to RM151.4bil in 2015. Loans growth hit RM142.5bil in 2014.

Net profit for its fourth quarter ended Dec 31, 2015 dropped 35% to RM316.12mil from RM486.19mil in the previous corresponding period, mainly due to higher impairment on loans and financing, higher operating expenses and higher impairment losses on other assets, partly offset by higher non-fund based and net fund based income.

Revenue during the quarter was marginally higher at RM2.85bil from RM2.84bil a year earlier.

The group’s performance was affected by lower investment banking and securities market related fee income, lower trading income, higher loan impairment charges and absence of large write-back and income from disposal of investments during the year,” it told Bursa Malaysia yesterday.

For its financial year ended Dec 31, 2015, RHB Cap’s net profit dropped to RM1.51bil from RM2.04bil in the previous corresponding period, while revenue increased to RM10.83bil from RM10.41bil a year ago.

It reported normalised pre-tax profit of RM2.41bil in the financial year ended Dec 31, 2015 after excluding the one-off career transition scheme (CTS) of RM308.8mil.

Despite the challenging outlook, Khairussaleh said RHB Cap is confident of growing its profitability this year

“We did quite a bit of restructuring last year and that kind of optimisation will continue. Based on our plan we do think we will perform better.”

He added that RHB Cap expects a ‘conservative’ gross loans growth of 8% this year in light of the current market environment,

“The industry expects the environment to be challenging.

We expect credit cards usage to increase. We target loans growth of 8%. In this type of environment we want to be conservative and not be too aggressive.”

In its filing with Bursa Malaysia yesterday, RHB Cap said 2015 was a challenging year due to volatility in the foreign currency markets, the significant reduction in oil prices, intense competition in deposits and slower capital market activities.

“In 2016, the economic landscape is expected to remain challenging. We will continue with our focus of optimising cost and managing asset quality, while we choose to invest in key growth areas and enhance our portfolio returns.”

RHB Cap declared an interim dividend of 12 sen per share totalling RM369mil for the financial year ended Dec 31, 2015.

The interim dividend represents a dividend payout ratio of 24.4% out of RHB Cap’s net profit for the year, which is the highest in three years.