The payout dividend ratio stood at 62.9% in FY21 and 62.5% FY22, said Maybank IB.
PETALING JAYA: Maybank Investment Bank (Maybank IB) Research is imputing a dividend payout ratio for RHB Bank Bhd at 62% for the financial year 2023 (FY23) and FY24.
The payout dividend ratio stood at 62.9% in FY21 and 62.5% FY22 and with the recent correction in share price, RHB Bank now offers an attractive FY23 forecast dividend yield of more than 7%, which is one of the highest in the industry, it added.
Meanwhile, it said that against the management’s targets for FY23, Maybank IB’s assumptions are more conservative, which would explain why its earnings forecasts for FY23 and FY24 are 6% below consensus.
Key variances include a FY23 forecast net interest margin (NIM) compression assumption of seven basis points (bps) versus management’s minus two bps target, as well as FY23’s estimated credit cost of 35 bps against management’s 25 to 30 bps, it added.
“Our loan growth target of 4.5% is within management’s range of 4% to 5% but our FY23 forecast cost/income ratio of less or equal to 45.5% is higher than management’s 44.6% target.
“Our FY23 estimated return on equity of 10.1% trails management’s 11% projection target,” Maybank IB said.
RHB Bank posted a 22% year-on-year increase in net profit for the fourth quarter ended Dec 31, 2022 (4Q22).
Net profit grew to RM772.11mil or 18.24 sen per share from RM631.16mil or 15.34 sen per share a year earlier.
For the full year, it chalked up a net profit of RM2.71bil from RM2.62bil a year earlier.
Loan growth for the period stood at 6.9%, with NIM inching up to 2.24%, from 2.20% last year.
In its notes on the 4Q22 financial performance, RHB Bank said the global economic growth is expected to slow down this year.
The bank said the outlook remains uncertain, on the back of continued monetary policy prudence in the United States, inflationary pressure, geopolitical tensions and trade protectionism.
“Domestically, gross domestic product (GDP) is still expected to grow, albeit at a moderate pace of 4.5%, supported mainly by resilient domestic demand with private consumption remaining as the primary driver of the economic growth for the year.”
For the banking sector, RHB Bank said loan growth is projected to sustain at 5% in 2023, in tandem with softer GDP growth, while interest rates are expected to normalise further to pre-pandemic level.
“Nevertheless, the banking industry is anticipated to remain resilient with robust capital and liquidity positions, supported by adequate level of provisioning.
“As the operating environment continues to be challenging, the group remains vigilant and committed to maintaining its strong fundamentals, focusing on achieving quality growth and driving service excellence,” it said.
