RHB Bank on firm footing with RM591m profit in Q1

KUALA LUMPUR: RHB Bank Bhd has started off strong this year after its first-quarter net profit surged 18.1 per cent to RM591 million in the same period last year, from RM500 million a year ago, says TA Securities.

The research house attributed the better results to healthier topline growth and lower allowances for credit losses.

Similarly, profit before tax surged 31.6 per cent quarter-onquarter on the back of stronger topline growth and improvement in asset quality.

“Growth was broad based as revenue increased across all domestic segments and Singapore. Most top-level indicators, such as ROE (return on equity), loan growth (domestic), current account, savings account growth, gross impaired loans ratio (GIL) and cost-to-income ratio (CTI) came within the management’s 2018 target.

“With that, achieving some 27 per cent and 28 per cent of net profit forecasts, RHB Bank’s Q1 results came within our expectations and the consensus,” it said.

TA Securities said RHB Bank’s domestic operations are expected to remain resilient this year.

“Underpinned by robust GDP growth, management foresees moderate increase in lending to household sector and recovery in business loans,” it said.

TA Securities said guiding for higher loan growth of six per cent, the year-on-year increase was expected to be supported by strong growth in mortgages and retail small and medium enterprises.

It said other earnings drivers include stable net interest margin, improving asset quality, ongoing efforts to keep costs lean, and increase in domestic and regional investment banking activities as the pipeline of deals remain robust.

It said better growth prospects this year should lead to better ROEs of nine to 10 per cent.

TA Securities has reiterated its “hold” call on RHB Bank with an unchanged target price of RM5.60.