PETALING JAYA: Analysts have maintained their earnings forecasts for now for RHB Bank
Bhd, but say they expect the lender’s third quarter ended Sept 30 (3Q26) earnings to remain relatively subdued, with continued net interest margin (NIM) compression and weaker treasury income likely to weigh on the bottom line.
TA Research said in a note to clients that this follows a 5.8% quarter-on-quarter (q-o-q) decline in net profit to RM807mil in 2Q26, from RM857mil in 1Q26, largely due to softer non-interest income (non-NII).
It noted that 2Q26 net fund-based income increased 1.6% q-o-q to RM1.58bil, supported by financing growth, while non-fund-based income declined 9.4% q-o-q to RM580mil amid unfavourable market conditions.
NIM also contracted by four basis points q-o-q to 1.82%, reflecting higher funding costs, it noted.
TA Research said following its recent meeting with management, it believes these pressures could persist into 3Q26, particularly given elevated fixed deposit (FD) competition and bond market volatility.
Nevertheless, stronger loan growth, relatively benign credit costs and tighter operating expense management should provide some earnings support, it added.
It said it believes loan growth remains one of RHB Bank’s key strengths.
Group loans expanded at an annualised 6.1% in first half of FY26, ahead of management’s 5%-6% full-year guidance, it said, adding that management indicated that growth momentum remained robust in 3Q26 and now expects financial year 2026 (FY26) loan growth to potentially exceed its existing guidance.
Singapore’s corporate and commercial portfolios have been major contributors, particularly real estate investment trust-related financing, while domestic growth continues to be supported by mortgages, hire purchase and higher-yielding commercial and middle-market lending, it added.
TA Research said it expects funding costs to remain elevated in 3Q26 amid ongoing competition for retail deposits, as banks continue to actively retain maturing funds.
While management maintained its FY26 NIM guidance of 1.83% to 1.86%, we see a risk of further marginal compression in 3Q26, as higher cost money market time deposits or MMTDs continued to outpace current account savings account growth in 2Q26, it said.
That said, the bank still has several levers to manage funding cost pressures, including tapping alternative funding sources such as medium-term notes and commercial papers as well as utilising foreign currency swaps, it said.
TA Research said asset quality continued to provide some support to earnings, adding that one of the more encouraging takeaways from its meeting was management’s proactive stance on cost management.
It noted that management reiterated that its cost optimisation initiatives were progressing well. It lowered its target price for RHB Bank to RM8.34 from RM8.76. At last look, it was at RM7.50.
