PETALING JAYA: RHB Bank
Bhd’s capital management plans, to be released in early 2027, together with stable fundamentals, are expected to drive improvements over the second half of 2026 (2H26).
RHB Bank’s second quarter ended June 30, 2026 (2Q26) results released last Friday largely met expectations, although MBSB Research, which forecast weaker earnings, shared that the bank’s management projected a neutral tone for its outlook.
The bank declared a first interim dividend of 15 sen, the same as 2Q25.
The research house has maintained a “buy” call on the stock and upgraded the target price (TP) to RM9.51 from RM9.17 previously, to account for a more comprehensive capital plan.
It, nevertheless, warned that the bank would likely miss return on equity (ROE) targets after a weak start compared to peers.
“This may negatively affect the final dividend payout, as elevated payouts are usually only given out during stronger performing years.
“It lists multiple drivers for a 2H26 recovery, but a lot of it is execution-dependent rather than clear earnings rebound, specifically its ability to accelerate current account/savings account (Casa) growth, garner recoveries, and manage non-fee non-interest income gains,” it noted.
“Overall, RHB Bank has made huge progress from a fundamental standpoint and should maintain steady progress.
“The prospects of detailed capital plan disclosure are exciting and could serve as a price re-rating driver, but will only be finalised by 1Q27 at the earliest.”
Hong Leong Investment Bank Research upgraded the stock to a “buy” from “hold” while raising the TP to RM9.50 from RM8.30, justifying the premium from the bank’s improving structural fundamentals and strengthening capital-return proposition supported by a more sustainable more-than-10% ROE profile.
It said the 50% to 60% dividend payout guidance, coupled with the capital management framework and potential 100 basis points (bps) common equity tier one uplift from Basel III reforms, could unlock further capital distributions over the medium term.
“This should reinforce RHB Bank’s more-than-6% dividend yield proposition, with potential to exceed 7% from the financial year ending Dec 31, 2028 (FY28), warranting a sustained valuation premium to its historical mean.”
BIMB Research said cost optimisation initiatives should keep operating expense growth in check, with the bank remaining on course to achieve its FY26 cost-saving target of RM300mil to RM350mil.
“Management continues to prioritise the expansion of higher-yielding commercial and mid-market loans to enhance asset yields. Meanwhile, credit costs have already reached the lower end of the guided range, although an extended conflict in the Middle East could pose downside risks to this outlook,” it said, maintaining a fair value TP of RM8.50. The research firm did not rate the stock.
“The launch of RHB Pay, Malaysia’s first bank-owned unified online payment gateway, is a positive development.
“The platform enables businesses to accept digital payments and receive funds directly into their RHB Bank accounts through a single integrated solution, which should support Casa growth and boost fee income through increased transaction volumes,” it added.
TA Research pointed out that several key metrics still require attention, notably the gross impaired loan ratio and net interest margin (NIM), with management highlighting the next six months as critical to closing the gap.
“Even so, FY26 guidance remains intact, underpinned by an upward revision in the internal gross domestic product forecast to 5.4% from 4.7% previously.
“NIM drivers include Casa growth from RHB Pay (adding one to two bps), optimisation of funding costs by reducing reliance on expensive money market time deposit, potential gains from marketable securities, and margin improvements from Singapore operations,” the research house said.
Meanwhile, Kenanga Research has maintained a “market perform” call on the stock with a TP of RM8.40.
“We believe the current share price fairly reflects RHB Bank’s fundamentals, particularly given its 6% dividend yield on a 60% payout. While this is above the industry average of 5.5%, it is below its historical yield profile of 7%.”
