Maybank IB said RCE’s management has again refrained from providing guidance on financing receivables growth for the second consecutive year.
PETALING JAYA: Financial services firm RCE Capital Bhd
remains cautious on the outlook for financing receivables, but is more upbeat on non‑performing (NPF) ratios and credit costs, according to Maybank Investment Bank Research (Maybank IB).
The research house said RCE’s management has again refrained from providing guidance on financing receivables growth for the second consecutive year, despite the historically strong correlation between civil service wage hikes and the group’s financing receivables.
Civil servants are set to receive another wage increase this January, following the earlier adjustment in December 2024 under the new Public Service Remuneration System.
Management noted that competition in the market remains intense and the creditworthiness of new financing applicants is still below expectations.
“RCE stated that it would have a better gauge of financing receivables growth in May 2026, when it reports its fourth-quarter results for the period ending March 31, 2026 (4Q26),” Maybank IB added in the note.
It observed that NPF ratios and credit costs continued to ease, with the NPF ratio improving to 4.7% in the second quarter of financial year 2026 (2Q26) from 4.8% in 1Q26.
Credit cost also moderated in 2Q26, declining 17% year‑on‑year and 54% quarter‑on‑quarter.
This was supported by fewer bankruptcies, resignations and early retirements among civil servants, trends likely linked to the 8% civil service salary hike in December 2024.
“RCE expects both NPF ratios and credit costs to continue moderating, which we gather can be attributed to the recent 7% civil service salary hike,” the research house added.
Maybank IB has maintained its earnings estimates for the company, based on gross financing receivables growth of 2% annually, an NPF ratio of 4.6% and credit cost of RM38mil to RM39mil.
It has downgraded the stock to a “hold” from “buy”, while keeping its target price unchanged at RM1.16.
Maybank IB noted that investors can still expect dividend yields of more than 5%, supported by a payout ratio of 75% to 80%.
It cautioned, however, that elevated household debt levels, exceeding 80% of gross domestic product, remain a key downside risk, as they could impair customers’ repayment capacity.
