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 gains 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 has 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 creates 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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