RHB Bank Bhd
Outperform. Target price:
RHBBANK’S FY23 net profit of RM2.81 billion made up of 101% of our full-year forecast and 99% of consensus full-year estimate. Meanwhile, an interim dividend of 25 sen was also within expectations for a full-year payment of 40 sen (60%) against our anticipated 41 sen.
YoY, FY23 total income declined (-5%) as net interest income fell (-10%) on the back of NIM pressures (1.92%, -34 bps) from tight deposits competition, undermining a 4.8% loans growth. On the flipside, non-interest income grew 14% following stronger treasury and investment performances. While operating expenses increased by 2%, owing to the softer top line, cost-income ratio expanded to 47.5% (+3.2ppt). Impairment-wise, credit cost was slightly higher at 16bps (+1bps) on stable asset quality, albeit with minor write-backs on tow. Thanks also to write-backs on financial investments, FY23 net profit managed to come in at RM2.81 billion (+5%).
QoQ, Q4’23 top line saw similar trends as the above, with NIMs being aggravated by year-end deposits competition. Meanwhile, operating expenses were deeper (+8%) from IT enhancements and loan provisions rising as more accounts had emerged into Stage 3. All this led Q4’23 net profit to be 10% lower at RM585.9 million.
FY23 loans growth of 4.8% missed its 5-5.5% target due to delayed drawdowns during the year-end which came in at January 2024. Conservatively, the group earmarks 4.5% to be delivered for FY24 with strong support expected from its regional operations.
Its digital bank, Boost Bank is not likely to incur deep heavy losses to the group going forward, as it has mostly incurred the bulk of its development expense in FY23.
Maintain OUTPERFORM with a higher rolled over GGM-derived PBV TP of RM7.25 (from RM7.15).