CIMB Research's top pick is RHB Bank
KUALA LUMPUR: RHB Bank and AmBank rebounded early Wednesday after both banking groups called off their merger plan and also helping to underpin the FBM KLCI’s advance.
At 9.07am, the KLCI was up 2.08 points or 0.12% to RM1,776.30. Turnover was 185.05 million shares valued at RM86.73mil. There were 166 gainers, 107 losers and 150 counters unchanged.
RHB Bank jumped 21 sen to RM5.09 with 219,300 shares done, off the earlier high of RM5.10.
AmBank rose six sen to RM4.76, but off the early high of RM4.89.
Both banks had on Tuesday said they “were not able to reach an agreement on mutually acceptable terms and conditions”.
This announcement comes just days ahead of the Aug 30 expiry of the exclusivity agreement to negotiate. No concrete reason was given for calling off the merger.
Maybank Investment Bank Research is maintaining a Hold call on RHB Bank and AMMB pending the release of their financial results after their proposed merger was called off.
It said on Wednesday it is now business as usual for both banks that have to now strive to improve on their return on equity (ROEs), which are expected to trend below 10% in the near term.
“We maintain our Hold call on both banks with unchanged TPs of RM5.25 for AMMB (pegged to a CY18 price-to-book value (PBV) target of 0.9 times; ROE: 8.4%) and RM5.45 for RHB (pegged to a CY18 PBV target of 0.9 times; ROE: 9.7%),” it said.
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