PETALING JAYA: RHB Bank
Bhd has emerged as one of the key beneficiaries of the equity market, which is expected to perform well this year, as the bank has high exposure to investment-related businesses, says CGS International (CGSI) Research.
“We forecast a 4.6% increase in the average daily value for the equity market in 2026, reversing the 19.6% drop in 2025. This, coupled with the improved sentiment in the equity market, bodes well for RHB Bank’s capital market income in 2026,” it explained.
The research house noted that the capital market-related income, primarily from the equity market, made up more than 50% of its total fee income in most of its financial years.
Maintaining its “add” call on the stock, it raised its target price to RM10 from RM8.10, while lowering its cost of equity assumption from 10.2% to 9.6%, given the improvement in the lender’s credit charge-off rate to an average of 18 basis points.
“We also lift our assumed earnings per share growth for the interim growth phase from 4.5% to 5.5% given the bank’s initiatives to limit the increase in its overheads while pushing for revenue growth (to achieve positive jaws),” it added.
The research house also expects the bank’s return-on-equity (ROE) to improve to 10.6% in financial year 2027 versus the bank’s targeted ROE of at least 12%.
It said RHB Bank remained as one of its top picks among the local banks, highlighting that it has undemanding valuations despite strong share price performance.
CGSI Research pointed out that RHB Bank’s price earnings valuation for 2026 was at 9.7 times, below the sector’s average of 11.6 times and the lowest in the sector.
