Page 3 - FIN435 RHB vs BPMB

1.0 Introduction

Banking institution and Non banking institution such as Development Financial Institution
(DFI) was essential in financial system. Both parties play major role in financial system and
gives their contribution in term of financial and non-financial to promote financial stability in
Malaysia.

RHB Bank represent the bank institution while Bank Pembangunan Malaysia Berhad
represent the non banking institution ( Development Financial Institution). The
establishment, uses and roles for banking institution and Development Financial Institution
was different.

A commercial bank such as RHB is a financial institution which performs the functions of
accepting deposits from the general public and giving loans for investment with the aim of
earning profit. Commercial bank gain their sources through deposits account, borrowed
funds, long term sources and fund and capital and reserves. The uses of commercial bank
mainly to conduct loans and advances operation such as providing commercial loan,
consumer loan and real estate loan to the consumer. In addition, commercial bank also have
a responsibility to invest in government paper and shares, whereas commercial banks must
maintain certain proportion of fund in government papers due to statutory requirement.
Lastly, commercial bank create other form of assets such as having fund keep at central
bank and become a lender to other financial institution.

The establishment of Development Financial Institution in the other hand is to provide a
range of specialized financial product and services to suit the specific needs of the targeted
sectors. Bank Pembangunan is a DFI that establish by Malaysian government to provide
medium to long term financing to the following sectors as infrastructure such as road and
highways, Port such as logistic and warehouse, maritime such as shipbuilding and ship
repair and oil & gas sector such as offshore and onshore operations.

In this assignment, financial performance by both banking and non-banking institution was
evaluated and measured directly from financial report. The analysis of data was to evaluate
the company position financially. The method for evaluation is ratio analysis. Comparison
was done in 2 ways : internally and externally. For internal comparison 3 years trend
analysis was conduct from 2016 to 2018 to evaluate the company ratio analysis. External
comparison was made by comparison other competitor in same sector to compare their ratio
for the latest financial year made in 2018.

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