RCE Capital posts solid 1Q26 performance
To strengthen competitive positioning, the group said it would continue to implement omnichannel marketing initiatives for enhanced customer experience and market reach expansion.
Releasing its results for the first quarter ended June 30 (1Q26) for the financial year ending March 2026 (FY26), RCE Capital saw net profit slide by 14.3% year-on-year to RM26mil, despite the marginal growth in revenue to RM79.8mil.
The group said the slightly better revenue was due to higher fee income from increased disbursements, before adding that net profit declined after accounting for higher allowances for impairment loss on receivables.
Compared to the previous quarter (4Q25), however, revenue fell by 14% from RM92.8mil, but net profit actually surged by 56.2% from RM16.6mil.
RCE Capital attributed the lower quarterly revenue to lower fees and early settlement profit income, while crediting the better 1Q26 profit primarily to the absence of impairment of goodwill on consolidation, and lower allowances for impairment loss on receivables.
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The Star
2 days ago
- The Star
RCE Capital likely to post stronger receivables
PETALING JAYA: RCE Capital Bhd 's impairment losses on receivables are expected to normalise following the elevated provisioning recognised in its fourth quarter ending March 31, 2026 (4Q25). The recent civil servant salary adjustments are also expected to enhance financial stability within RCE Capital's main borrower base, it said. This will potentially lower the risk of early retirement or migration to the private sector by improving disposable income levels, it noted. RHB Research said the company is still maintaining a cautious stance on disbursements amid the still-elevated and plateauing cases of bankruptcies and early retirements. 'While most of the bad news looks priced in, an unexciting core earnings profile will likely cap the stock's potential upside. 'Management reiterated the need to remain cautious with disbursements amidst a tough operating environment, where cases of bankruptcies and early retirements are still at elevated levels. 'Financing receivables growth was a soft 1% year-on-year but flat quarter-on-quarter,' RHB Research said. However, the company could benefit slightly from the recent overnight policy rate cut. This will then have a slight positive impact on interest or profit expenses on RCE Capital's revolving credits, which form some 30% of the group's financing liabilities base, RHB Research said. 'We estimate the interest/profit expense savings to amount to circa RM2mil per year, which is not too significant. 'More significantly, RCE Capital is planning a new sukuk tranche issuance to capitalise on the favourable bond yield movements of late. 'While the tranche amount and profit rate are undisclosed at this juncture, we think this could allow the group to more significantly lower its overall cost of funds over a longer period,' it said. RHB Research, which had retained its 'neutral' call on RCE Capital, decreased its financial year 2026 (FY26) to FY28 earnings estimates by 15%, 12%, and 10%, respectively, after factoring in softer receivables growth and higher credit cost assumptions. It also reduced its target price to RM1.15 from RM1.25, noting the share price has retreated some 16% over the past three months. But at these reduced share price levels, it pointed out most of the bad news has likely already been priced in. For the 1Q25, RCE Capital's net profit dipped to RM25.99mil from RM30.32mil in the previous corresponding period, while revenue stood at RM79.79mil against RM79.12mil a year earlier.
New Straits Times
3 days ago
- New Straits Times
RCE Capital's asset quality under pressure, FY26 forecast trimmed
KUALA LUMPUR: RCE Capital Bhd's asset quality remains under strain amid persistently high bankruptcy rates and early retirements in the civil service, even as impairment provisions fell 25 per cent quarter-on-quarter. Public Investment Bank Bhd (PublicInvest) said the decline in provisions suggests early signs of moderation, but noted that RCE's non-performing financing (NPF) ratio has climbed to a record 4.8 per cent, highlighting concerns over the credit quality of new borrowers. It said RCE booked a one-off impairment of about RM3 million to reflect lower repayments after changes to the debt service ratio (DSR) treatment, which now excludes certain allowances. "Previously, these allowances were included in the 60 per cent DSR threshold, enabling higher financing eligibility. Their exclusion has reduced financing limits and payroll deductions, leading to only partial repayments," PublicInvest said in a note. RCE has since provisioned for the affected portion of its portfolio. For the first quarter of financial year 2026 (1Q26), RCE's net profit fell 14 per cent year-on-year to RM26 million, dragged by higher impairment allowances due to an uptick in self-declared bankruptcies and early retirements within the civil service. PublicInvest said the results were below expectations, accounting for only 19 per cent of its and consensus estimates. It added that the discrepancy in its forecast was mainly due to lower-than-expected loan disbursements. "As such, we cut our earnings forecast for financial year 2026 (FY26) to FY28 by nine to 12 per cent, as we lower our financing receivables assumption to account for RCE's cautious lending stance and increased competition, especially from digital lenders. "We maintain our 'Neutral' rating on RCE, as we remain concerned over the group's asset quality, with the NPF ratio still elevated. Post-earnings adjustment, our dividend discount model (DDM)-derived target price is lowered to RM1.22," it said. PublicInvest also lowered its financing receivables growth assumption to one to two per cent for FY26-FY28 from three per cent previously. RCE saw its quarterly financing receivables eased marginally by 0.2 per cent, likely due to the high base effect in 4Q25 following salary adjustments. "While credit demand is still resilient, management continues to adopt a cautious lending approach amid a challenging operating environment," it noted.
The Star
4 days ago
- The Star
RCE Capital posts solid 1Q26 performance
PETALING JAYA: RCE Capital Bhd believes that its commitment to maintaining asset quality by actively monitoring its portfolio and credit exposure is key to ensuring long-term sustainability of its business. To strengthen competitive positioning, the group said it would continue to implement omnichannel marketing initiatives for enhanced customer experience and market reach expansion. Releasing its results for the first quarter ended June 30 (1Q26) for the financial year ending March 2026 (FY26), RCE Capital saw net profit slide by 14.3% year-on-year to RM26mil, despite the marginal growth in revenue to RM79.8mil. The group said the slightly better revenue was due to higher fee income from increased disbursements, before adding that net profit declined after accounting for higher allowances for impairment loss on receivables. Compared to the previous quarter (4Q25), however, revenue fell by 14% from RM92.8mil, but net profit actually surged by 56.2% from RM16.6mil. RCE Capital attributed the lower quarterly revenue to lower fees and early settlement profit income, while crediting the better 1Q26 profit primarily to the absence of impairment of goodwill on consolidation, and lower allowances for impairment loss on receivables.
