PETALING JAYA: RHB Bank
Bhd’s operating efficiency is expected to improve, supported by cost savings progressing ahead of schedule, greater use of artificial intelligence (AI) and funding cost management.
Kenanga Research noted RHB Bank had achieved RM288mil in cost savings by June, putting the bank ahead of schedule towards its full-year target of RM300mil to RM350mil in savings.
Under its PROGRESS27 strategy, cumulative cost savings, after accounting for AI investment costs, are expected to reach RM500mil by 2027.
Beyond anti-money laundering and fraud management, AI has reduced the time needed for manual processes, shortening loan disbursements from a fortnight to a couple of days, Kenanga Research noted.
RHB Bank expects losses at its 40%-owned Boost Bank to begin easing in 2027, partly supported by the latter’s early move into lending, focusing on small-ticket loans and motorcycle hire-purchase financing.
Kenanga Research considers RHB Bank’s loan growth target of 5% to 6% to be attainable, with the research house forecasting growth of 5.7% for 2026.
To manage funding costs, RHB Bank is seeking low-cost current and savings account deposits through services such as RHBPay. Its reconciliation, reporting and fast settlement features are aimed at attracting businesses to maintain operating accounts with the bank.
Its MySiswa initiative has attracted RM4.1bil in deposits, up 7% year-to-date, including RM555mil in current and savings account deposits.
The banking group has also tapped the commercial paper market to mitigate pressure from competing deposit campaigns.
Kenanga Research sees opportunities for RHB Bank to increase non-interest income (NOII) through wealth management in Singapore, bancassurance and asset management. It expects NOII’s share of revenue to rise from 28% in the first half of financial year 2026 to 29% in 2027.
On capital management, RHB Bank is expected to unveil a capital plan in the first quarter of financial year 2027, ahead of Basel III final reforms taking effect in 2028.
The research house considers the capital impact of fixed-income securities revaluation manageable and maintained its dividend forecast at 47 sen per share for the financial year ending December 2026.
Kenanga Research upgraded RHB Bank to “outperform” from “market perform”, with an unchanged target price of RM8.40 a share, following a 12% decline in its share price over three months. The bank offers a forecast dividend yield of 6.3%, above the industry average of about 5.5%.
