FDI inflows stimulate loan business, Industrial Bank aggressively targets high-growth regions.

Mohamad Raisi, Managing Director and CEO of Industrial Bank, pointed out during an online performance briefing on Tuesday that with the influx of FDI, the bank believes this will continue to drive the performance of the domestic economy.

Currently, the bank focuses the growth potential of domestic loan business in four regions: Klang Valley, Johor, Penang, and Sarawak.

He said that this is mainly due to the construction of data centers, which has driven the development of related regions, including industrial and industrial development.

"This can also indirectly drive the performance of specific loan businesses. We will provide any financing convenience and are optimistic about achieving the expected loan growth of 5% for the whole year."

However, he said that not all financing requests will be accepted without question, but rather there will be some scrutiny on the projects.

When asked about whether the government's implementation of targeted subsidy policies would lead to an increase in bad debts for banks, Mohamad Rasi expressed that there have been no observed changes at this stage.

In this regard, he continues to be optimistic about maintaining bad debts at the current level, while also having a higher probability of reversing provisions.

On the other hand, Industrial Bank also announced its latest performance today. Due to the high provisions and increased operating expenses, its net profit for the second quarter of the fiscal year 2024 decreased by 10.68% year-on-year to 700 million 22.3 million 8000 ringgit, but it still declared a dividend of 15 sen, with ex-dividend and payment dates to be announced.

The bank reported to Bursa Malaysia on Tuesday that its second quarter revenue increased by 9.15% year-on-year to 4.4 billion 17.87 million 9000 ringgit.

For the first half of the year, revenue increased by 10.73% year-on-year to 8.8 billion 20.18 million 8000 ringgit; net profit, on the other hand, decreased by 7.51% year-on-year to 1.4 billion 52.47 million 8000 ringgit.

However, with the growth in loans of 6.4%, Industrial Bank's interest income amounted to 2.8 billion ringgit, an increase of 4.0% compared to the previous year; and the net interest margin was 1.89%.

As for non-interest income, it increased by 28.5% to 1.4 billion ringgit, mainly contributed by higher net gains from foreign exchange, insurance, and investment income.

Operating expenses are 1.9 billion ringgit, mainly due to the rise in marketing costs, with a cost-to-income ratio at 46.3% level.

Meanwhile, Industrial Bank's capital continues to be strong, with Common Equity Tier 1 (CET 1) and total capital ratios, reported at 16.5% and 19.2% respectively.

Total gross impaired loans (GIL) reported at 4 billion ringgit, with a gross impaired loans ratio reported at 1.76%; loan loss coverage (LLC) ratio reported at 70.4%.

As for customer deposits reaching 240.3 billion ringgit, Current Account and Savings Account (CASA) account for 28.1% of it, with a Liquidity Coverage Ratio (LCR) reported at 139.6%.

Looking ahead, the bank stated it will continue to enhance asset quality, while also reinforcing the execution of existing strategies, and aiming for an annual Return on Equity (ROE) of 10%.

Mohamad Rasid expressed that with the Fed's rate cut being certain, he remains optimistic that the ringgit against the US dollar will continue to strengthen, yet still pegging the year-end trend at the 4.35 to 4.50 level.

He said that although the performance of the ringgit is currently unstoppable, the possibility of fluctuations cannot be completely ruled out.

He pointed out that the Fed's interest rate cut does push the ringgit against the US dollar to a high level, but the overall trend is still being influenced.

This also means that the Fed's decision and the degree of interest rate cuts will determine whether the ringgit continues to strengthen.

In addition, he is optimistic about the performance of digital banks, mainly because there are more customers using them at present and new products will be continuously launched.

Also attending the online briefing today is the recently appointed Chief Financial Officer, Mohamed Rastan Shahlon.