KUALA LUMPUR: RCE Capital Bhd
's 6MFY18 net profit of RM43mil makes up 51% of Maybank Investment Research's full-year forecasts, which is within expectations.
According to the research firm, what surprised was the slowdown in loan growth to an annualised pace of 6% from 11.6% in FY17. Higher net interest margins from lower funding costs compensated for the slowdown.
Asset quality was stable with an NPL ratio of 4.2%, while loan loss coverage was more than comfortable at 173%.
"The issue of strictly enforcing a 60% debt service ratio (DSR) on existing borrowers affected industry-wide disbursements for about three months up to Jul 2017, contributing to the slowdown in loan growth.
"Since then, the situation has somewhat normalised with clarification that the 60% DSR would be enforced only on new borrowers."
Maybank IB Research expects lower loan approval rates and cut its loan growth assumption to 5% to 6.5% from FY18-FY20 from 6% to 8% previously.
It has maintained its FY18 net profit forecast but trimmed it by 3%/4% for FY19/20.
The research firm said the maiden interim dividend per share of three sen was a positive surprise.
"Our 3.5sen DPS for FY18 is raised to 6sen on the assumption that there will be a final DPS of similar magnitude, which would represent a payout ratio of just 14%," it said.
Limited time offer:
Just RM5 per month.
