TA Research noted that in the past five years, RHB’s bancassurance and bancatakaful businesses have grown steadily.
PETALING JAYA: RHB Bank
Bhd’s new bancassurance deal could boost net income by up to RM130mil annually, potentially lifting its financial year 2026 (FY26) earnings forecast by around 3%, according to the latest update from the bank.
This marks an upgrade from previous estimates of a 2% contribution, signalling stronger-than-expected growth from the partnership, Maybank Investment Bank Research (Maybank IB) said.
However, the research house maintained a “hold” call on the stock, pending the release of its second quarter of financial year 2025 results later this month.
It also kept the target price unchanged at RM7.10.
RHB Bank and RHB Islamic Bank recently entered into new banca agreements with Tokio Marine Life (TML) and Syarikat Takaful Malaysia Keluarga plus Syarikat Takaful Malaysia Am (collectively STM).
Analysts said the insurers will benefit from RHB’s strong customer trust and wide network of branches, digital platforms and relationship managers.
They can also leverage the bank’s data analytics and artificial intelligence tools, reach out to its large customer base with low current insurance coverage (less than 5%) and benefit from strong retail and small and medium enterprise loan growth, which are projected to increase by 7% and 8.3% annually from FY24 to FY27, respectively.
The total access fee of RM1.615bil payable to RHB comprises an upfront fee of RM1.3bil and RM315mil of performance fees.
The RM1.3bil will be amortised over 20 years, which is about RM49mil net of tax per year.
The RM315mil performance fees will be paid over three years, up to RM80mil (after tax) per year, if certain targets are met.
“In short, the bank could potentially recognise a net income of up to RM130mil a year if performance targets are hit,” Maybank IB said in a report post a briefing hosted by the bank.
Analysts noted that the new distribution agreements continue RHB’s long partnerships with TML (since 2010) and STM (since 2015). This helps maintain the strong teamwork and integration they have built over the years.
For instance, TA Research noted that in the past five years, RHB’s bancassurance and bancatakaful businesses have grown steadily, with total sales increasing by 8.2% annually.
Apart from the credit side, TA Research said the partnership opens up fee-based income opportunities in the underpenetrated non-credit segment.
“With insurance penetration across RHB’s customer base still below 5%, management sees significant headroom for scaling,” the research house added, keeping its “buy” call and RM7.52 target price on the bank.
Meanwhile, CGS International Research reiterated its “add” call on RHB due to its potential for faster loan growth than the industry, better efficiency from cost-cutting and the extra income from the recent banca partnerships.
