Page 25 - FIN435 RHB vs BPMB

Conclusion and Recommendation

By observing and analyzing the overall performance and ratio analysis for RHB Bank and
Bank Pembangunan Malaysia Berhad, it can be said that the net profit shows an increase
trend over the 3 years for RHB Bank which is good for the bank and shows smooth
operation of the investment and that expenses are controlled. Unfortunately, the net profit for
Bank Pembangunan shows slight decrease for 3 years consecutively, hence the
management of Bank Pembangunan Berhad has to act quickly to overcome the barrier and
regain an increase in net profit.

RHB Bank Berhad indicates an increased trend for ROA and ROE for 3 consecutive years.
While Bank Pembangunan Berhad shows slight decreased for ROA and ROE. This trend
was derived by the net profit trend which shows positive trend for RHB Bank and negative
trend for Bank Pembangunan Berhad. Hence to increased their ROA and ROE both bank
should increased their net profit without acquiring new asset or increased their capital equity
by improved the effectiveness of their assets and equity.

In term of liquidity ratio, both Bank indicates a fluctuate and vary trend. Bank Pembangunan
Berhad shows higher ratio than RHB Bank Berhad which indicate that Bank Pembagunan
meet the demand loan better than RHB Bank but at the same time it may face liquidity risk
higher than RHB Bank. In conclusion, Bank should meet the loan demand made by
customer to gain profit but at the same time they have to control their liquidity.

Capital Adequacy Ratio trend for both RHB Bank and Bank Pembangunan indicated upward
trend for 3 years. Bank Pembangunan Berhad indicates higher CAR Ratio than RHB Bank.
We can conlude that Bank Pembangunan may has greater level of unexpected losses that it
can absorb before becoming insolvent. Both Bank need to control the rate of CAR Ratio to
avoid higher level of unexpected loss. In term of core capital ratio, both bank record
unsynchronized trend. Bank Pembangunan have higher ratio than RHB Bank which
conclude that it has more capital dependence toward debt. Both bank have to minimize their
core capital ratio to reduce their dependence toward debt.

In term of asset quality ratio especially for non performing loan ratio, Bank Pembangunan
have higher rate by far compared to RHB Bank, thus it may face credit quality risk. Both
Bank need to minimize non performing loan ratio to avoid the credit quality risk.

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