In its recently released 3QFY20 results, RHB's PATMI of RM622mil met expectations despite 9MFY20 PATMI of RM1.6bil at 82% to 83% of Kenanga's and consensus full-year estimates.
RHB left room to book in further pre-emptive provisions in 4QFY20, which could nudge up FY20 credit cost to 45-50bps compared to 39bps in 9MFY20 (annualised) and the earlier guided 40bps.
"We note that asset quality thus far appears to be under control while the continued build-up in loan loss reserves has already lifted LLC to 108%.
"Balance sheet continues to look solid with a CET-1 ratio of 16.4%, leaving ample room for capital management initiatives ahead," it said.
The research house raised its FY20 and FY21 credit cost assumptions to 48bps and 43bps respectively, which are cushioned by downward revisions in opex forecasts.
It revised its target price higher to RM6.30 from RM5.75 with its GGM-derived target FY31 price-book value raised to 0.92x from 0.84x.
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