PETALING JAYA: Analysts appear broadly positive on RHB Bank
Bhd’s revived insurance consolidation plan with Tokio Marine Asia Pte Ltd.
The general view is that the proposal could unlock value, strengthen fee income visibility and improve returns over the longer term.
The positive outlook follows Bank Negara Malaysia’s approval for RHB Bank to begin negotiations with Tokio Marine.
The talks involve the potential disposal of up to 100% of RHB Insurance Bhd and the integration of both parties’ general insurance operations into a larger combined entity.
Under the proposal, RHB Bank is expected to retain up to a 35% stake in the enlarged business.
CIMB Research sees the move as strategically significant as part of a broader structural shift taking place across Asian banking groups.
“The proposed exercise aligns RHB Bank with a broader structural trend across Asia where banks increasingly move from owning and underwriting insurance towards distribution-led bancassurance with strategic minority participation.
“The move is set to unlock the value of RHB Bank’s general insurance business and improve return on equity through an earnings-accretive partnership, and also facilitates a transition to a capital-light fee model while preserving fee income upside,” it explained.
The deal, if concluded, would revive an earlier attempt between the two parties that collapsed in 2019 after disagreements over terms and conditions.
Back then, RHB Bank had proposed selling up to 94.7% of its general insurance business to Tokio Marine.
However, CIMB Research believes prospects are stronger, given the improved working relationship between the parties.
This follows the successful rollout of an exclusive 20-year bancassurance partnership signed in August 2025 involving Tokio Marine Life and Syarikat Takaful Malaysia Keluarga Bhd.
It estimated the merged operation would command close to a 10% market share, potentially making it the third- or fourth-largest player in the domestic general insurance market.
An analyst told StarBiz that valuation will be a critical issue as the original 2019 deal collapsed because both parties could not agree on terms and pricing.
He reckoned negotiations this time may still hinge on whether Tokio Marine is willing to pay an attractive premium for RHB Insurance, especially given stronger industry competition and evolving insurance market dynamics.
That said, CIMB Research remains constructive on RHB Bank’s broader earnings trajectory.
Core net profit is projected to rise from RM3.36bil in the financial year ended 2025 (FY25) to RM3.62bil in FY26 and RM3.8bil in FY27.
The research house believes RHB Bank remains one of the banking sector’s best yield plays at 6.5% to 6.9% for FY26 to 27, while potential upside could also come from cost optimisation initiatives and lower credit charges.
CIMB Research added that a potentially benign credit outlook in 2026, together with the bank’s RM800mil “cost take-out” initiative under its Progress27 strategy, should improve earnings visibility.
It also said this would support more proactive shareholder returns.
The research house has reiterated its “buy” call on RHB Bank with an unchanged target price of RM9.55. It said RHB Bank remains undervalued, trading at around one time FY26 to FY27 book value, below the sector average of 1.2 times.
Analysts see room for a rerating if the insurance consolidation exercise materialises successfully and operational efficiencies begin translating more meaningfully into earnings.
