1. Introduction RHB Bank Berhad is the main subsidiary under RHB Banking Group.

It is under the Commercial Banking Group and is fully owned by RHB Capital Berhad. RHB Bank wholly owns RHB Islamic Bank Berhad. Under a new corporate structure, various businesses have been categorized into four Strategic Business Units (SBUs). RHB Bank Berhad is under the retail banking category, serving retail customers and also small businesses. The banks forte is in products such as insurance, wealth management, hire purchase, cards and unsecured loans as well as secured loans that provide mortgages for both individuals and also small and medium enterprises. RHB Banking Group has gone through various mergers and partnerships, forming the RHB Banking Group as it is today. The presence of the group today is the results of mergers of Kwong Yik Bank Berhad, Sime Bank Berhad, DCB Bank Berhad and Utama Banking Group. Kwong Yik Bank Berhad was formed in 1913 and was the very first local bank in Malaya. In 1997, DCB Bank Behard merged with Kwong Yik Bank Berhad to form RHB Bank Berhad, turning a medium-sized bank into the third largest integrated financial services group in Malaysia. The merge was also the countrys biggest ever banking merger. In 1999, Sime Bank Berhad merged with RHB Bank Berhad, becoming part of the RHB Banking Group. Finally in 2003, Utama Banking Group merged with RHB Bank Berhad. In RHB Bank, the bank emphasizes several core values, which are customer focus, teamwork, respect, innovation and quality service. We believe that with these values, we can achieve our vision which is to be among the top three financial institutions in ASEAN by year 2020. The Board of Directors of RHB Bank Berhad consists of two Non-Independent NonExecutive Directors, being Datuk Azlan Zainol and Encik Johari Abdul Mud. Its Independent Non-

Executive Directors are Dato Abdullag Man Noh, Encik Haji Khairuddin Ahmad, Mr Ong Seng Pheow and Dato Othman Jusoh. The Managing Director of RHB Bank is Dato Tajuddin Atan. 2. Methodology In order to complete this assignment, we have to analyze and interpret the sources such as the quantitative resources and also the qualitative resources that we get from the internet and the website of RHB Bank carefully. The quantitative resources are the reference from our textbook and the financial reports that we have downloaded from the website of RHB Bank from the year 2004 to year 2009 with income statements, balance sheets and statements of cash flows in it. In addition, we have used qualitative sources to analyze and identify the performance of the bank. For example, we have used the vision and mission statement of the bank, their websites, articles and news to analyze the performance of RHB Bank. While doing our analysis for RHB Bank, we have done comparisons on the data from the year 2004 to 2009 by using charts and bars. Besides, we have also used formulas and also certain ratios to evaluate the annual performance of the bank. During our first meeting, we have also identified the different areas in which we would like to analyze and have divided them among our members. Meetings are also held once a week to make sure that every group member is on the track and in the process of completing the project. Whenever we have problems, we will discuss with each other or seek guidance from Datin Dr Joriah. Other than that, we also refer to our course mates or seniors in order to complete our assignment on time. 3. Data Analysis

3.1.Total Asset Year 2004 2005 2006 2007 2008 2009 (estimated value) Total Asset( RM000) 71,320,123 74,154,469 85,948,893 85,063,579 84,238,533 120,316,004

Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

R M('000) 140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 2004

T otal Asset

Total Assets

2005

2006

2007

2008

2009 Estim ated

Year

Figure 1: Total Assets Total asset is the total amount of additional of current assets and fix assets. Based on the histogram above, the total asset of RHB Bank has increased from 2004 to 2006 but decrease slightly from 2006 to 2008. In 2009, it is estimated that there is a large amount of increase in the total assets of RHB Bank. The percentage of increase in the year 2009 is estimated to be 42.83%, from RM 84,238,533,000 to the estimated value of RM120, 316,004,000. The difference is RM36,

077,471,000. The large increase in total asset happens because RHB Bank, the third largest bank in Malaysia is increasing their branches and expanding their market share in Malaysia. From year 2005 to 2006, there is a 15.9% increase from RM 74,154,469,000 to RM85, 948,893,000. The increase happens because RHB Bank is now stable and can be trusted so the public feels safe to invest or deposit their money in RHB Bank. From year 2006 to year 2008, there is a slightly decrease in total asset. This occurs because the performing loan has decreased compared to previous year, affecting the total asset.

3.2. Current Assets Year Current Assets (RM000) 2004 50,237,819 2005 51,611,650 2006 58,142,668 2007 65,774,843 2008 65,411,978 2009 (estimated value) 94,786,531 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

CurrentAssets(RM'00 0)
100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0

Current Assets (RM'000)

Figure 2: Current Assets Current assets are the assets of a bank or company that can be easily converted into cash, bank accounts and account receivables in a short time to pay a banks debts or do investments. From the chart above, we can see that current assets are increasing in a slow rate from year 2004 to year 2007. There is a fall from year 2007 to year 2008 in current assets, where the cash and short term funds in the bank decreased about RM 3,346,261,000. In addition, the deposits in placement with banks and other financial institutions decreased very much which was from RM 2,964,499,000 in year 2007 to RM 848,371,000 in year 2008. This might be due to the reason that other banks and financial institutions have removed their deposits from RHB Bank to finance their debts, payments or investments. After that, the current assets continued to grow from year 2008 to year 2009 and is estimated to reach the highest amount of current assets in the year of 2009 which will be RM 94,786,531,000. This happens when other banks and finance institutions put more deposits in RHB Bank due to the higher interest rates offered by RHB Bank.
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3.3. Return on Asset Year 2004 2005 2006 2007 2008 2009 (estimated value) Net profit (RM000) 339,174 269,802 392,045 645,393 936,456 1,150,901 Total asset (RM0000) 71,356,012 74,154,469 85,948,893 85,063,579 84,238,533 120,316,004 Return on asset (%) 0.48 0.36 0.46 0.76 1.11 0.96

Source: RHB Bank Berhad, Annual Report of year 2004 to December 2009

Figure 3: Return on Asset Return on asset (ROA) is measured by dividing the net income of ones company by its total asset. It indicates the ability of a company to generate profit relative to its total asset.

Basically, the higher the number, the more efficient the company in using its assets. Based on the chart above, RHB bank has a positive value of ROA from the year 2004 to 2009. In year 2004, the ROA was 0.48% but it dropped to 0.36% in year 2005 due to the incline in interest income as a result of the increase in inflation rate. Then, the value of ROA increased to 1.11% in 2008. This shows the excellence of RHB Bank in credit management by having training programs to develop the skills of its employees. In year 2009, the value of ROA is estimated to drop from 1.11% to 0.96%. This is because RHB Bank aims to focus on its core business and expands its business by improving its infrastructures and services to increase the value of customers.

3.4. Liquidity Ratio Year Current Assets Current Liabilities Liquidity Ratio (%)

(RM000) (RM000) 2004 50,237,819 51,552,452 0.98 2005 51,611,650 50,615,012 1.02 2006 58,142,668 57,123,934 1.02 2007 65,774,843 69,593,046 0.95 2008 65,411,978 67,848,155 0.96 2009 (estimated value) 94,786,531 98,714,787 1.00 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

Figure 4: Liquidity Ratio The liquidity ratio measures the banks ability to pay short term obligations. The higher the liquidity ratio, the more capable the bank in paying its short term obligations because it has more current assets than current liabilities to pay the short term obligations or investments. From the chart above, the liquidity ratio of RHB Bank increased from year 2004 to year 2005 and maintained at 1.02 until year 2006. The increase from year 2004 to year 2005 implies that the current assets of the bank, which is cash and short term funds increased. There is a big fall in the liquidity ratio from year 2006 to year 2007 because the cash and short term funds decreased about RM 6,738,025,000, bringing a big negative impact to RHB Bank because they may not have enough of current assets to pay debts on that particular period and this resulted an increase in the current liabilities which contributed to lower liquidity ratio. Then, the liquidity ratio increased from the year 2007 to the year 2009.

3.5. Total Loans Year Total Loans (RM000) 2004 37,607,363 2005 37,090,808 2006 46,879,331 2007 47,470,523 2008 52,600,047 2009 (estimated value) 74,814,364 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

Figure 5: Total Loans A loan in recognized when cash is advanced to borrowers. They are initially recorded at fair value. The amount of loans lent by RHB Bank to borrowers has seen an increase since the year 2003. In 2004, the total loan was RM37,607,363 ( in thousands). In 2009, the amount of total loan increased by almost twofold to RM 74,814,364 (in thousands). The increase was a generous sum of RM 37,207,001. Compared to the total loans in 2004, it increased by 98.9%. The increase of total loans as years go by indicate that RHB Bank has been gaining trust by the public. It also
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shows that the loan provided is able to cater for various individuals. The bank itself has also introduced different range of loans such as car loan, home loan, personal finance etc. The great increase in loans borrowed by the public also indicates that the interest rates set are affordable and well accepted.

3.6. Total Deposits Year Total Deposits (RM000) 2004 51,552,452 2005 50,615,012 2006 57,123,934 2007 69,593,046 2008 67,848,155 2009 (estimated value) 98,714,787 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

Figure 6: Total Deposits

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Total deposits are the total deposits from customers plus the total deposits and placements of banks and other financial institutions. From year 2004 to 2006 and year 2007 to 2008, there is only a slight difference in the total deposits. But, from year 2006 to 2007 and year 2008 to year 2009, there is a major growth in the total deposits. From year 2006 to 2007, total deposits of RHB Bank increased from RM57, 123,934,000 to RM 69,593,046,000, the difference is RM12, 469,112,000, which amounts to 21.83%. From year 2008 to 2009, the total deposits is estimated to increase RM30, 866,632,000, which is around 45.49%. In the year of 2001 and 2008, the economy crisis happened because of terrorist attack and mortgage backed-security (MBS). But in year 2007 and 2009, the increase of the deposits shows that the economy have recovered and the public have more money to deposit into banks. Besides, the public have confidence that RHB Bank Berhad will not bankrupt so easily because of its strong financial position.

3.7. Asset Quality Ratio Year Asset Quality Ratio (%) 2004 6.3 2005 5.2 2006 4.6 2007 3.5 2008 2.2 2009 (estimated value) 2.1 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

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Figure 7: Asset Quality Ratio Asset quality ratio is the ratio of non-performing loans to total loans. From the chart, it is clearly seen that the asset quality ratio has been steadily declining. The ratio in 2004 was 6.3%, meaning 6.3% of the loans borrowed are bad. However, in 2009, only 2.1% of the total are nonperforming loans. Therefore, the smaller the asset quality ratio, the better it is. RHB has been doing a good job in protect their bank as the quality of the loans determine the earning of the bank. If the loan is in default, the bank has to suffer the damage, which is its monetary loss.

3.8. Non-performing Loan Year 2004 2005 2006 2007 Operating Income (RM'000) 2,400,251 1,971,138 2,213,752 1,671,707
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2008 1,159,999 2009 (estimated value) 1,609,232 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

Non-Perform L ing oans

3,000,000 2,500,000 2,000,000

0 ' M R

1,500,000 1,000,000 500,000 0 2004 2005 2006 2007 2008 2009 Yea r Non-Perform Loans ing

Figure 8: Non-performing Loan Non-performing loans are loans that have been individually reviewed and specially identified as bad, doubtful or substandard after taking into consideration the realizable value of collateral, if any, when in the judgement of the management, there is not prospect of recovery. A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this depends on the contract terms. However, a loan is non-performing when payments of interest and principal are past due by 90 days or more and at least 90 days of interest payments have been capitalized, refinanced and delayed by agreement or payments are less than 90 days overdue but there are other good reasons to doubt that payments will be made in full. The amount of non-performing loans has been unstable over the years, shown in the fluctuating chart as above. Overall, the amount of non13

performing loans for the bank has decreased by RM 791,019 ( in thousands) from 2004 to 2009, which is a decrease of 33% compared to 2004. This clearly shows the bank has been improving on their risk assessment and risk control operations when it comes to providing loans. 3.9. Operating Income Year Operating Income (RM'000) 2004 639439 2005 975277 2006 1393997 2007 1584793 2008 1812295 2009 (estimated value) 1864328 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

Figure 9: Operating Income Operating income is also known as operating profit or EBIT (earnings before interest and taxes). It is used to measure the earning power from ongoing operations of a bank and it is equal to
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the earning before interest payments and income taxes are deducted. Based on the chart above, the operating income of RHB Bank grows every year. This implies that the earning power of RHB Bank is becoming stronger than before. The increase from the year 2004 to year 2006 was very big but the increase in operating income is at a slower rate after year 2006 until year 2009.

3.10. Operating Expenses Year 2004 2005 2006 2007 2008 2009 (estimated value) Operating Expenses RM(000) 892,299 930,044 1,110,953 1,166,258 1,199,452 1,245,900

Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

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Figure 10: Operating Expenses Operating expenses are the total of personal cost, establishment cost, marketing expenses, administration and general expenses. Expenses includes salaries and wages, rental fees, depreciation, advertising expenses, legal and professional fees and etc. From year 2004 to year 2009, operating expenses are increasing every year, but there is only a slight increase. The most significant growth is in year 2006. From year 2005 to 2006, operating expenses increased as much as RM 180,909,000, which is 19.45%. According to annual reports, the personnel cost increased from RM 503,099,000 to RM602, 715,000 in year 2006. This happened most probably because of the increase in the banks branches. When there are more branches, the salaries and wages, rental fees and others will increase. Besides, the marketing expenses also increased from RM92,295,000 to RM 136,482,000 as the bank have spent more in 2006 in dealers handling and warranty fees.

3.11. Net Income Year Net Income RM(000) 2004 339,174 2005 269,802 2006 392,045 2007 645,393 2008 936,456 2009 (estimated value) 1,150,901 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

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Figure 11: Net Income Net income is equal to the income that a firm has after subtracting the costs and expenses from the total revenue. Net income can be distributed to holders of common stock as dividends or held by the firm as retained earnings. Net income can be assumed as net profit for the financial year. Specifically, net income is calculated by subtracting all allowances, expenses, interests, preferred stock dividends, taxes, and also other adjustments to the net income from revenues. Based on the chart above, the net income of RHB Bank has seen a stable increase. Compared to RM 339,174 ( in thousands) in 2004, the amount increased as much as RM 811,727 ( in thousands), which is an amazing 239.3%. However, there was a slight decrease in the net income in 2005 compared to 2004, which is a decrease of RM 69,372 ( in thousands). This might be caused due do a inefficiency in the operations and also due to the economy turn down.

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3.12. Interest Income and Interest Expense Year Interest Income RM(000) Interest Expense RM(000) 2004 2,422,569 1,290,093 2005 2,824,271 1,519,198 2006 3,994,572 2,158,462 2007 4,360,755 2,358,060 2008 4,364,682 2,134,199 2009 (estimated value) 4,517,289 2,263,487 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

Figure 12: Interest Income & Interest Expense Interest income is the interest paid by institutions or customers when RHB Bank provides loans or hold certain securities. The most interest income is generated from loans, advances and financing. Interest expense is the interest paid to customers or others institutions when they deposit money into RHB Bank. For interest expense, from year 2004 to 2009 estimated, the amount is increasing except for year 2008 only. It has decreased RM 223,861,000 compared to 2007. This happens because the
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mortgage-backed security caused the economic crisis in 2008. The interest rate decreased, so most of the public decided to take out their deposit from the bank. For interest income, from year 2004 to 2009 estimated, the amount keeps on increasing. Increase is the most in year 2006, it increased from RM 2,824,271,000 to RM 3,994,572,000, which is 41.43%. This is because the loans, advances and financing had increased for RM 875,601,000 or 44.05%. Besides, the securities held to maturity increased around RM 133,356,000. The increase in this two areas leads to the large increase in interest income.

3.13. Net Interest Margin Year Net Interest Income Total Assets RM (000) Net Interest Margin, %

RM (000) 2004 1,132,475 71,320,123 1.588 2005 1,305,073 74,154,469 1.760 2006 1,836,110 85,948,893 2.136 2007 2,002,695 85,063,579 2.354 2008 2,230,483 84,238,533 2.648 2009 (estimated value) 2,253,803 120,316,004 1.873 Source: RHB Bank Berhad, Annual Report of year 2004 to September 2009

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Figure 13: Net Interest Margin Net interest income is the difference between the interest income and the interest expense. Net Interest Margin (NIM) is the measurement of profitability of a banks investment. Net interest margin in the percentage of the net interest income divide by total assets. From the line graph, the net interest margin increased from year 2004 to 2008, the percentage increased from 1.588% to 2.648%. This means RHB Bank has maintained consistency or increase slightly in profitability over the years. But at the estimated year 2009, the net interest margin decreased to 1.873%. The estimated total asset in year 2009 has a huge growth, this decreases the net interest margin when the net interest income is divided by total assets. The huge assets in 2009 means RHB Bank will receive a large amount of interest income, but the interest income does not increase in year 2009, so the net interest margin decrease to 1.873%.

3.14. Management Efficiency Ratio Year Management Efficiency Ratio (%) 2004 0.78 2005 0.69 2006 0.61 2007 0.58 2008 0.54 2009 (estimated value) 0.49 Source: RHB Bank Berhad, Annual Report of year 2004 to December 2009

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Manag entE em fficiencyRatio

1 0.8 0.6 0.4 0.2 0 2004 2005 2006 2007 Yea r 2008 2009

Managem ent EfficiencyRatio

Figure 14: Management Efficiency Ratio Management efficiency ratio is the ratio of the overhead expenses to the net interest income. It is a way of measuring the operating leverage of the bank. It measures how much, in cents, the bank needs to spent to generate an income of RM 1. In 2004, the management efficiency ratio was 0.78. This means that 78 cents is needed to generate RM 1. Over the years, the ratio has suffered a decline. This means that less money needs to be invested or spent in order to generate an income. In 2009, the management efficiency ratio is only 0.49. Only 49 cents is needed to generate RM 1. This vast improvement shows that the bank is stable and has the ability to generate in comes without using a large amount of capital. This also shows that the management has been improving and has been coming out with various ways in order to generate income with the minimal amount of capital.

3.15. Shareholders equity Year 2004 Shareholders equity (RM000) 3,992,467

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2005 4,089,011 2006 4,357,570 2007 4,185,437 2008 6,266,099 2009 (estimated value) 9,200,199 Source: RHB Bank Berhad, Annual Report of year 2004 to December 2009

Figure 15: Shareholders Equity Shareholders equity is also the net worth of a company or owners equity. From the graph above, the shareholders equity of RHB bank increased from RM 3,992,467 ( in thousands) in year 2004 to RM 4,357,570 ( in thousands) in 2006. As evidence, we can know that the commitment of RHB Bank to focus on Consumer Banking to create value for its customers is important for the potential growth in order to gain confidence of the shareholders to invest in RHB Bank. Besides, RHB Bank merged with RHB Delta Finance which makes the shareholders more willing to invest

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due to the expectation of future growth.

In addition, RHB Bank become a financier to

international market players in cooperation with JBIC (Japan Bank for International Cooperation) and JCF (Japan Carbon Finance, Ltd) boosting the performance of RHB bank. the 3.95 % reduction of shareholders equity in 2007is caused by the financial crisis as the result of the liquidity of Unites States banking systems falling abruptly. After 2007, the shareholders equity increased to RM 6,266,099 ( in thousands) in 2008 and it is estimated the shareholders equity increased to RM 9,200,199 ( in thousands) in 2009 because their service sector is anticipated to remain strong.

3.16. Return on equity Year 2004 2005 2006 2007 2008 2009 (estimated value) Net profit (RM000) 339,174 269,802 392,045 645,393 936,456 1,150,901 Shareholders equity (RM000) 3,992,467 4,089,011 4,357,570 4,185,437 6,266,099 9,200,199 Return on equity (%) 8.50 6.60 9.00 15.42 14.94 12.51

Source: RHB Bank Berhad, Annual Report of year 2004 to December 2009

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Returnon Equity(% )
18 16 14 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 2009* 8.5 6.6 9 Return on Equity (% ) 15.42 14.94 12.51

Figure 16: Return on Equity Return on equity (ROE) measures how well the company is reinvesting earnings to generate additional earnings to shareholders. The higher the number, the more profitable the company is. Investors will usually look on the value of return on equity to evaluate the firm. Return on equity has dropped from 8.5% in 2004 to 6.6% in 2005 due to the decline in net profit. It then rises to 15.42% in year 2007 which was the highest value of return on equity due to the 64.62% increase in net profit. Due to the merger between RHB Bank and RHB Delta Finance, it had expanded the business of RHB Bank in the banking industry which was able to contribute more profit to the bank. Return on equity has a slight fall after the year 2007, it was 14.94% and is estimated at 12.51% in year 2008 and 2009 respectively. This is because of the economic recovering after the credit crisis in 2007.

3.17. Dividends
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Year Dividends (RM000) 2004 189,082 2005 136,842 2006 136,810 2007 136,810 2008 32,146 2009 (estimated value) Source: RHB Bank Berhad, Annual Report of year 2004 to December 2009

Figure 17: Dividends Dividends are the payout to the shareholders. Corporation usually pays part of their earnings which are often declared quarterly. Generally speaking, the dividends given out were decreasing except in 2006 and 2007 in which a same amount was distributed in both years. In 2004, the dividends paid was RM 189,082 ( in thousands ). There was a drop of 27.62% in the dividends in 2005 compared with the previous financial year in which the amount of dividends was RM 136,842 ( in thousands ). It then decreased to RM 136,810 ( in thousands) in 2006 which is same amount with the dividends paid
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out to the shareholders in 2007. In year 2008, there was a sharp reduction of 76.50% in the dividends given to the shareholders which is RM 32,146 ( in thousands) whereas there was no declaration of dividends in 2009. As evidence, RHB always improve its products and services and keep adding services and products to enhance the credibility of the bank to the customers in order to improve their financial performance. RHB Bank also launched the Transformation Program in 2007 to strengthen the operation and domestic franchise, in which RHB bank aims to become third-largest lender in Malaysia and the ASEAN region.

3.18. Earnings per Share Year 2004 2005 2006 2007 2008 Earnings per Share (cent) 8.7 6.9 10.1 16.5 15.6

2009 (estimated value) 15.92 Source: RHB Bank Berhad, Annual Report of year 2004 to December 2009

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Figure 18: Earnings per Share The basic earnings per share of RHB Bank is calculated by dividing the net profit of the financial year by the weighted average number of ordinary shares in issue during the financial year. From the year 2004 to year 2005, there is a decrease in earnings per share. This is because the net profit earned decreased from RM 3007,542,000 to RM 269,802,000 in the year of 2005 while the weighted average number of ordinary shares remained the same, that was 3,899,972,000 shares in total. Since the earnings per share has a positive relationship with net profit of the financial year, when the net profit decreases, the earnings per share decreases too. From the year 2005 to year 2007, the net profit of RHB Bank continued to grow gradually, therefore, the earnings per share grew gradually too. During the year 2008, there is a reduction which is due to the increase in weighted average number of ordinary shares issue, which is bigger than the increase in net profit. With the growing in the net profit from the year 2008 to year 2009, we estimate that the earnings per share will grow till 15.92 cents. The earnings per share of the bank can be said unstable when the bank changes the average number of ordinary shares issue.

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3.19. Branches and ATMs As we know, RHB Bank aims to serve customer value by providing excellent service, deliver superior shareholder value in the same time benefit the stakeholders. In doing so, RHB Bank has ensured that the strategies adopted are the most competitive, effective and efficient to bring the benefit to all stakeholders.

To achieve these objectives, RHB Bank has enhanced its service quality by implementing it strategic initiatives based on customer needs; emanate trust and earning respect from stakeholders. In 2003, RHB Bank has completed the merger of their commercial banking businesses RHB Bank Bhd and Bank Utama (Malaysia) Bhd. The merger brings to the transformation of Bank Utama branches into RHB bank. The merger has brought convenience to customers as RHB bank has a wide network of 470 ATMs and an extended branch network of 222 branches nationwide. In 2004, RHB bank has increased the total number of ATM network to up to 511, with 289 located at RHB bank branches and the remainder located at public places.

In 1 April 2005, due to the several policy changes especially foreign exchange policy which the Bank Negara Malaysia loosen the foreign exchanges rules to expands customers hedging , RHB bank has strengthen its presence and share in the market by offering its products and services to a wider customer base. The network of RHB Bank is comprehensive as it consists of branches and alternative different types of banking channels such as Internet Banking, Phone Banking and ATMs. As in the end of 2005, RHB Bank had 200 domestic branches and also with branches at Singapore, Brunei, and Thailand.
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In June 2008, RHB Bank opened its new branch as to meet the increasing demand for conventional banking products and services from East Malaysia. The opening of this new outlet has brought the total number of RHB Bank Branches to 184. There were 7 branches in Sabah and 1 in Borneo Branch total 8 branches located in Sabah, although it is less than the total amount of branches if compared to the year 2005 but RHB Bank managed to strengthen their presence in ASEAN region. RHB Bank is the fourth largest bank in Malaysia; RHB bank will restructure its network to a better position by stronger branding in Malaysia in the following year. RHB Bank have planned thoroughly to relocate or reduce or increase its branches up to the total about 200 branches of its network. Besides, RHB Bank also plans improve its information technology to support its operating systems which is able to bring down the cost of doing business meanwhile improving the products and services provided to fulfill the needs of customers and better able to compete with other financial institutions.

4.0 Conclusion

From the data analysis above, we have interpreted the RHB Bank financial performance for year 2004 to the estimate of year 2009. The total assets for the RHB Bank have increased in a large percentage from year 2004 to year 2009. The increase in total assets shows that RHB Bank is widely expanding their business and this creates more value to the firm. For the current assets of RHB Bank, it has increased from year 2004 to year 2009 but there was a small decrease during the

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year 2008. Better still, it is estimated to increase gradually in the future to enable the bank to pay the debts, payments or investment using current assets. Based on the liquidity ratio graph, there is a big drop during the year of 2007. The bank met its crisis during the year where the deposits in the bank decreased sharply. Most of the banks and financial institutions withdrew deposits from RHB Bank causing RHB Bank to lack in current assets, therefore, lowering the liquidity ratio. Fortunately, the liquidity ratio rose from year 2007 to year 2009 and it will continue in the future. Besides, the total deposits also increased around 50 % from year 2004 to year 2009. When the customers of RHB Bank increase, the deposits increase. This means that RHB Bank management have done a good job when expanding the business to gain more market share and there are more customers who trust RHB Bank The operating income of RHB Bank increases every year based on the graph. This is due to the bank strengthening its earning power by implementing some operations to increase the operating income and profit as well. Thus, it is estimated that the operating income will continue to rise in the future. Since the business of RHB Bank has been widely expanding, the operating expenses surely increases every year to afford the daily operations. Customers of RHB Bank have increased. Customers that obtain loans from bank will be more than the customers that deposit credit. So, according to the graph, the interest income and interest expense in year 2004 are almost equal but in year 2009, interest income has increased a lot. Based on the graph, the net interest margin increased from year 2004 to year 2008, it shows that the expanding business is creating value and is gaining profit for RHB Bank.
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Based on the dividends graph, the dividend decreased in the year 2005 until year 2006 and the amount of dividends maintained until the year of 2007. By the year of 2008, there is a sharp decrease in the amount of dividend and there will be no dividend paid to shareholders in the year 2009. But still, RHB Bank is doing their best to improving its products and services. In addition, the earnings per share of the bank is not really that stable. It dropped a bit during the year of 2005 but it rose until year of 2007. After that, there was another small drop in the year 2008 and it increased again in the year 2009. This is due to the bank changing its average number of ordinary shares issue. When the share issues increase, the earnings per share will decrease like we have seen in the graph. Although it is financial crisis in recent year, RHB Bank still able to survive in the banking industry to be the fourth largest bank in Malaysia. The value of ROA and ROE were better than the previous year if compared with 2004, 2005 and 2006. Generally speaking, RHB Bank continues to improve its banking services to better gain the credibility from customers and shareholders. For expansion, RHB Bank has strengthened their presence to 200 branches network within the ASEAN region such as Singapore, Brunei, and Thailand to meet the demands of customers. Thus it has given the good future growth to shareholder that it is best to invest in RHB bank. The total loans lent to borrowers have increased almost twofold since 2004. The amount had not seen any decline. This shows that the public trusts in the bank and the products and services provided caters for a wide range of customers. The non-performing loans of RHB Bank have been unstable. There have been up and down in the amount of non performing loans. Therefore, the bank has to improve in its risk assessment when lending out loans. The asset quality ratio of RHB banks shows a decline. This means that the ratio of nonperforming loans to total loans has been declining. Relative to the total amount of loans, the bank
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has been working fairly well in controlling the number of bad loans. The net income has also been increasing gradually year after year, except for 2005. This may be caused by the inefficiency in operations in that year also because of the economic turndown. Finally, the efficiency ratio has been declining gradually. The ratio is the overhead expenses divided by the net interest income. This signifies that less money is needed in order to generate an income. Therefore, income is generated with a minimal amount of capital.

5.0 Bibliography RHB Bank Berhad APAStyle org: Electronic references. Retrieved September 30, 2009, from http://rhb.com.my/corporate_profile/investor_relation/pdf/quarterly_results/2009/RHB%20Bank %20Unaudited%20FS%20-%2030%20Sep%202009.pdf RHB Bank Berhad APAStyle org: Electronic references. Retrieved December 31, 2008, from http://www.rhb.com.my/corporate_profile/investor_relation/pdf/annual_reports/2008/RHB %20Bank%20Berhad%202008.pdf RHB Bank Berhad APAStyle org: Electronic references. Retrieved December 31, 2007, from http://www.rhb.com.my/corporate_profile/investor_relation/pdf/annual_reports/2007/RHB %20Bank%20Berhad%202007.pdf RHB Bank Berhad APAStyle org: Electronic references. Retrieved December 31, 2006, from http://www.rhb.com.my/corporate_profile/investor_relation/pdf/annual_reports/2006/RHB %20Bank%20AR06.pdf

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RHB Bank Berhad APAStyle org: Electronic references. Retrieved December 31, 2005, from http://www.rhb.com.my/corporate_profile/investor_relation/pdf/annual_reports/2005/RHBBANK BerhadFA2005.pdf RHB Bank Berhad APAStyle org: Electronic references. Retrieved December 31, 2004, from http://www.rhb.com.my/corporate_profile/investor_relation/pdf/annual_reports/2004/rhb_bank_an nual_report_2004.pdf Saunders, Anthony., and Cornett, Marcia Millon. Financial Markets and Insitutions. 4th ed. New York: McGraw-Hill, 2009.

6.0 Appendix Formulas 1. Total Deposits = Deposit from customers + deposit and placement banks and other fin. Institutions

2. Total Cost = Non-interest expense + interest expense

3. Liquidity Ratio = Current assets / Current liabilities

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4.

Asset Quality Ratio = Non performing loans / Total loans

5. Efficiency Ratio = Non-interest expense / (Revenue interest expense)

6. Return on Asset = Profit after tax / Total assets

7.

Return on Equity = Profit after tax / Shareholders Funds

8. Net Interest Margin = (Interest Return- Interest Expenses)/ Average Earnings Assets

9. Earnings Per share = (Net Income- Dividends on Preferred Stock)/ Average Outstanding shares

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