Analysts maintain ‘outperform’ rating on RHB Bank
KUCHING: Analysts at Kenanga Investment Bank Bhd (Kenanga Research) maintained their ‘outperform’ rating on RHB Bank Bhd (RHB Bank) based on its stable growth and steady balance.
In a report, it remarked, “RHB Bank could be operating with more modest loans prospects in FY24, with stable net interest margins (NIMs) likely met with a balanced set of non-fund based streams.”
It noted that RHB Bank looks to maintain its 4.5 per cent loans growth target (lower from FY23’s 4.8 per cent achievement).
The group ties this to the group’s in-house GDP expectation of 4.6 per cent (close to the research team’s 4.7 per cent) as the group anticipates its books to be mostly supported by its homebased retail and SME portfolios.
“For now, the group plans to stay its ground in mortgage markets where it sees encouraging growth.
“We note that RHB Bank has not factored in upcoming infrastructure projects as part of its projections, opening the possibility for better-thanexpected delivery should they are roll out accordingly,” it said.
Aside from that, it said, balance in lieu of its mortgage efforts, RHB Bank could participate competitively but opined that it will be selective with its pricing.
On the flipside, the easing of funding costs is seeping in with fixed deposit rates in the recent months appearing to fall below FY23’s mark.
This supports the NIM guidance of 1.8 per cent-1.9 per cent.
On its non-interest income (NOII) seeking prospects, it said FY23’s NOII was led by strong returns from its liability management initiatives which comprises of forex swaps.
The group believes that interest rates movements may pose more risks to its returns than forex rates.
“Given that the street is expecting rate cuts in 2H24, we believe its contributions during the year could decline. On the other hand, stockbroking and fee-based sources are likely to benefit from a more vibrant stock market to support overall performance,” Kenanga Researcch said.
Meanwhile, on the progress of launching its associated digital bank, the research team highlighted that Boost Bank is poised to launch in the coming months with introductory deposit products.
Lending products are due to be integrated progressively following further reviews by BNM, as with its digital banking peers.
“We note that Boost Bank has largely contributed to the RM26 million associate losses to RHB Bank for its 40 per cent stake (or circa RM65 million in entirety), as it has yet to generate revenue.
“Assuming this prevails as a run rate, it translates to significantly higher cost efficiency against its peer, Aeon Bank which appears be seeing net losses of circa RM130 million per year,” Kenanga Research said.