TA Research highlighted that “management remains cautiously optimistic about the outlook for this year”.
PETALING JAYA: RHB Bank
Bhd’s prospects for the rest of the year appear balanced between resilience and caution, as analysts weigh solid fundamentals against macroeconomic uncertainty following the group’s first-quarter results.
Despite a 2.7% year-on-year rise in net profit to RM750.03mil for the three months ended March 31, (1Q25), research houses were mixed in their outlook, citing lower gross domestic product (GDP) growth projections, credit cost risks and muted non-interest income (NOII) as key variables.
Hong Leong Investment Bank Research (HLIB Research) noted that RHB had revised its loan growth guidance to between 5% and 6% from between 6% and 7%, in response to revised GDP growth expectations to 4.5% from 5%.
Nevertheless, guidance on net interest margins (NIM) remains intact, expected to be flat to four basis points (bps), excluding any overnight policy rate cut, underpinned by concrete efforts to ease funding cost pressures through portfolio rebalancing, Singapore deposit rate repricing and leveraging statutory reserve ratio (SRR) liquidity, the research house said.
HLIB Research maintained a “buy” rating on RHB with an unchanged target price of RM7.70, calling the stock attractive at 0.88 times price-to-book due to a dividend yield of 6.7%.
TA Research was similarly upbeat, reiterating its “buy” rating and raising its target price to RM7.52 from RM7.
The research house highlighted that “management remains cautiously optimistic about the outlook for this year”, with credit cost guided at 15bps to 20bps and return on equity (ROE) forecast at 10.4% to 10.8%.
The bank’s focus on mitigating risks through early restructuring efforts was also noted, especially for exposure to small and medium enterprises, with RHB proactively engaging with potentially affected borrowers and reinforcing its early restructuring and rescheduling initiatives.
TA Research also underscored stable NIM expectations of 1.86% to 1.90%, aided by the recent SRR cut and an improving current account savings account ratio.
However, Maybank Investment Bank Research (Maybank IB) struck a more cautious tone, revising its call to “hold” from “buy” and cutting its target price to RM7.10 from RM7.70.
“RHB’s 1Q25 core net profit was below expectations, largely on account of lower-than-expected NOII,” the research house said.
Reflecting a weaker macroeconomic backdrop, Maybank IB cut its 2025 to 2027 earnings forecasts for RHB by between 8% and 9%, largely to factor in slower economic growth, a potential rate cut and lower NOII, and added that it has raised credit costs by 20% from 3bps.
CIMB Research, meanwhile, maintained a “buy” call with an unchanged target price of RM7.50, asserting that RHB’s dividend yield will likely remain close to 5.5%, even under a more stressed scenario.
It said key catalysts for RHB include higher-than-expected NIM, better asset quality, higher-than-expected loan growth, and sustained dividend payout. However, it warned of downside risks from higher-than-expected cost of funds and uptick in impaired loans.
The bank’s key performance index targets for this year include ROE of 10.4% to 10.8%, loan growth of 5% to 6%, NIM of 1.86% to 1.90%, and a dividend payout ratio of 30% to 50%.
Credit costs are expected to be kept within 15bps to 20bps, while the cost-to-income ratio is guided at 45.5% to 46%.
For 1Q25, RHB reported revenue of RM4.39bil, marginally lower than RM4.40bil in the previous year. Net profit of RM750.03mil was up from RM730.17mil previously.
