Kenanga keeps ‘outperform’ call on RHB Bank

KUALA LUMPUR: Kenanga Research has maintained its “outperform” call on RHB Bank Bhd and sees the bank’s share price rising as high as RM5.45, from the current RM4.90.

This followed RHB Bank’s latest interim results — a net profit of RM489 million in the third quarter ended September 30 2017.

Kenanga Research said RHB Bank had posted higher income but this was offset by an increase in operating expenses and provisions for loan losses.

The bank’s net interest in margin was stable at 2.2 per cent in the third quarter. This was due to it redeeming its sub-debts and senior notes in the second quarter.

The research firm noted that RHB Bank’s mortgages and corporate loan growth would likely slow in the last quarter of the year.

As of September 30, 68 per cent of RHB Bank’s mortgages were below the RM1 million mark.

“As loans outpaced deposits, loan-to-deposit ratio went up slightly to 93.8 per cent. Deposits eased 1.5 per cent due to the bank’s conscious efforts to reduce its Money Market Term Deposits,” said Kenanga Research.

RHB Bank’s allowance for impairment on securities was significantly lower during the quarter.

This was due to absence of an impairment of RM108 million on corporate bonds related to the oil and gas sector in the second quarter.

For the nine months, Kenanga Research said RHB Bank’s branch in Singapore had posted losses, dragged down by impairment of bonds related to the oil and gas industry and impairment of select corporate loans.

It added that the bank is likely to see slower loan growth in Labuan, Sabah, Thailand, Indonesia and Cambodia.