Assignment BMOM5203

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OUM BUSINESS SCHOOL

SEPTEMBER 2014

BMOM5203

ORGANISATIONAL & BUSINESS MANAGEMENT

MATRICULATION NO.: CGS00982601
IDENTITY CARD NO.: 770706075057
TELEPHONE NO.: 0193367076
E-MAIL : carlshahrul@oum.edu.my
LEARNING CENTRE: KOTA KINABALU

rhb banking group: surviving THE AFTERMATH OF ASIA FINANCIAL CRISIS 1997

1.INTRODUCTION

RHB Banking Group (RHB Capital) was incorporated in Malaysia as a public limited company in August 1994 under the name of DCB Holdings Berhad. It assumed its present name on 16 June 1997. RHB Capital was listed on the Main Board of Bursa Malaysia Securities Berhad on December 1994, replacing DCB Bank Berhad (now known as RHB Bank Berhad), pursuant to a restructuring scheme undertaken in 1994.

Currently RHB Banking Group is the fourth largest fully integrated services group in Malaysia providing financial products and services through its main subsidiaries – RHB Bank Berhad, RHB Investment Bank Berhad, OSK Investment Bank Berhad, RHB Insurance Berhad and RHB Islamic Bank Berhad, while its asset management and unit trust businesses are undertaken by RHB Asset Management Sendirian Berhad and RHB Islamic International Asset Management Berhad.

In March 2005, the RHB Banking Group became the first domestic financial group to set up an Islamic banking subsidiary, known as RHB Islamic Bank Berhad. In November 2012, the RHB Banking Group acquired OSK Investment Bank Berhad (OSKIB) and in April 2013, the merger between OSKIB with RHB Investment Berhad (RHBIB) made RHBIB the largest investment bank in Malaysia by assets.

The Group’s core businesses are streamlined into seven Strategic Business Group: retail banking, business banking, group transaction banking, corporate & investment banking, Islamic banking, global financial banking and group treasury.

As of 2013, RHB Bank has over 194 branches in Malaysia, 21 branches in Singapore, 2 branches in Thailand, and 1 branch in Brunei and Vietnam (RHB Bank, n.d).

1.1Capitalization (Financial Performance)

Surviving the aftermath of Asia Financial Crisis in 1997, RHB Banking Group has recorded vast growth with the acquisition OSK Investment Bank in 2012. RHB Capital has reported a net profit of RM767.5 million for the first half of 2013 (RHB Bank Group Annual Report, 2013)

RHB Bank Group Annual Report (2013) presented the comparison of financial performance summary between the year 1998 and 2013 as follows:

RHB BANK GROUP

2013
1998
RESULT (RM* millions)

Operation profit
2,749
1,992
Profit before taxation
2,339
1,445
FINANCIAL POSITION (RM* Millions)

Total assets
174,158
94,938
Gross loans, advances and financing
120,082
62,639
Total deposits
148,094
77,765
Paid-up capital
3,318
3,318
Total equity
13,412
6,828
ORDINARY DIVIDENS (Paid)

Gross dividend rate (%)
12.9
3.79
Net dividend (Paid) (RM* millions)
408
185
FINANCIAL RATIOS

Net tangible assets backing 50 sen
185.2
87.76
ordinary share

Return on average shareholder’s equity (%)
13.9
18.16
Earning per 50 sen ordinary share (sen)
26.6
17.30

Table 1.1: RHB Banking Group Comparison of Financial Summary Between the Year 1998 and 2013 (Source: RHB Bank Annual Report, 1998 & 2013)

1.2 Organizational Structure (Corporate Governance)

Table 1.2: RHB Bank Group Structure (Governance Model)
(Source: RHB Bank Annual Report, 2013)

The board governs the business and affairs of the Bank and exercises all powers pursuant to the Articles of the Bank. To ensure effectiveness in discharging its roles and responsibilities, the Boards delegates specific authorities to the relevant Board Committees.

Among the Board’s key roles and responsibilities are:
(a)Strategy Setting
(b)Operations and Conduct

(c)Risk Management
(d)Talent Development and Succession Planning...
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