Latest news with #RM7.70
The Star
6 days ago
- Business
- The Star
Analysts offer mixed outlook on RHB
PETALING JAYA: RHB Bank Bhd's prospects for the rest of the financial year appear balanced between resilience and caution, as analysts weigh solid fundamentals against macroeconomic uncertainties following the group's first-quarter results. Despite a 2.7% year-on-year rise in net profit to RM750.03mil for the three months ended March 31, 2025 (1Q25), brokerages are mixed in their outlook, citing slower gross domestic product (GDP) growth projections, credit cost risks and muted non-interest income (NOII) as key variables. Hong Leong Investment Bank (HLIB) Research noted that RHB has revised its loan growth guidance to 5%-6% from 6%-7%), in response to revised GDP growth expectations now 4.5% against 5%. Nevertheless, net interest margin (NIM) guidance remains intact, expected to be flat to +4 basis points (bps), excluding any overnight policy rate (OPR) cut, underpinned by concrete efforts to ease funding cost pressures through portfolio rebalancing, Singapore deposit rate repricing and leveraging statutory reserve ratio (SRR) liquidity, it said. HLIB maintained a 'buy' rating with an unchanged target price of RM7.70, calling the stock attractive at 0.88 times price-to-book (P/B) due to a dividend yield of 6.7%. TA Research was similarly upbeat, reiterating a 'buy' and raising its target price to RM7.52 from RM7.00. It highlighted that 'management remains cautiously optimistic about the outlook for 2025', with credit cost guided at 15–20bps and return on equity (ROE) forecast at 10.4%–10.8%. The bank's focus on mitigating risks through early restructuring efforts was also noted, especially for small and medium enterprises (SME) exposures, with RHB proactively engaging with potentially affected borrowers and has reinforced its early restructuring and rescheduling (R&R) initiatives. TA also underscored stable NIM expectations of 1.86% to 1.90%, aided by the recent SRR cut and an improving current-account-savings-account (CASA) ratio. However, Maybank Investment Bank (MaybankIB) Research struck a more cautious tone, revising its call to 'hold' from 'buy' and cutting its target price to RM7.10 from RM7.70. It stated that 'RHB's 1Q25 core net profit was below expectations, largely on account of lower-than-expected NOII'. Reflecting a weaker macroeconomic backdrop, MaybankIB has cut its 2025-2027 earnings for RHB by 8%-9%, largely to factor in slower economic growth, a potential rate cut and lower NOII, and added that it has raised credit costs by 20% from 3bps. CIMB Research, meanwhile, maintained a 'buy' call with an unchanged target price of RM7.50, asserting that dividend yield will likely remain close to 5.5%, even under a more stressed scenario. It believes key catalysts for RHB include 'higher-than-expected NIM, better asset quality, higher-than-expected loan growth, and sustained dividend payout'. However, it warned of downside risks from 'higher-than-expected cost of funds' and 'uptick in impaired loans'. The bank's key performance index targets for 2025 include ROE of 10.4%–10.8%, loan growth of 5%–6%, NIM of 1.86–1.90%, and a dividend payout ratio of 30%–50%. Credit cost is expected to be kept within 15–20bps, while the cost-to-income ratio is guided at 45.5–46%. For 1Q25, RHB reported revenue of RM4.39bil, marginally lower than RM4.40bil in the previous year. Net profit of RM750.03mil was up from RM730.17mil previously.
New Straits Times
02-05-2025
- Business
- New Straits Times
Banks well-positioned as loan growth set to accelerate
KUALA LUMPUR: Banks' loan growth is expected to accelerate later in the year, driven by disbursements from previously approved large-scale investments, said Hong Leong Investment Bank Bhd (HLIB). For the financial year 2025 (FY25), the firm expects credit demand to remain resilient and is maintaining its loan growth projection at between 5.5 per cent and 6.0 per cent. HLIB said loan growth remained stable at 5.2 per cent in March, supported by a rise in business loans, which grew to 4.8 per cent from 4.5 per cent in February, driven by stronger working capital demand from non-small and medium enterprises. Meanwhile, household loan growth eased slightly to 5.9 per cent from 6.0 per cent, still underpinned by mortgage and automotive financing. The firm said the deposit grew by 0.4 per cent on monthly basis, althought the current account savings account ratio easing slightly to 31.3 per cent. Competition for fixed deposits (FDs) remained benign, with no notable sequential rate increases observed. Encouragingly, asset quality improved in March, as the gross impaired loans (GIL) ratio declining by three basis points month-on-month to 1.42 per cent, with improvements seen across both business and household segments. "Looking ahead, asset quality is expected to remain stable given resilient local economic conditions. "In any case, we are not concerned on any weaknesses as banks are better equipped versus prior slumps, the large impaired loan allowances built up over the past five years act as robust buffer to cushion any spike in GIL ratio," it added. Average lending rates declined to 4.97 per cent, while the three-month FD rate rose to 2.58 per cent, resulting in a narrower interest spread of 2.39 per cent, the lowest since November 2022. Despite this, the firm expects net interest margins to remain stable in the first quarter of 2025, supported by reduced deposit competition and disciplined pricing strategies. HLIB maintained its 'overweight' call on the banking sector, citing solid fundamentals, undemanding valuations and an appealing dividend yield. The firm's top three stock picks include CIMB Group Holdings Bhd, AMMB Holdings Bhd and RHB Bank Bhd with target prices of RM8.80, RM6.20 and RM7.70, respectively. HLIB said these banks offercompelling value and robust growth prospects within the sector.
