Page 27 - FIN435 RHB vs BPMB

4.0 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 banks should increase 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 banks 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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