For the thousands of individuals and families who rely on RHB Bank Bhd for their financial needs, the bank’s performance has a direct impact on their daily lives. From mortgage payments to auto financing, the bank’s ability to meet its key performance indicator (KPI) targets can bring a sense of stability and security to the communities it serves. As RHB Bank group managing director and CEO Mohd Rashid Mohamad recently informed analysts, the bank is on pace to achieve the majority of its KPI targets for the financial year ending December 31, 2022 (FY22), a feat that could have a positive ripple effect on the people and businesses that depend on it.
The bank’s KPI targets include a return on equity (RoE) of 8.5%, loan growth of 4% to 5%, a gross impaired loan (GIL) ratio of 1.7% or less, a current account savings account (CASA) or low-cost deposit ratio of 30%, and a cost-to-income (CTI) ratio of 45% or less. According to Mohd Rashid Mohamad, the bank has so far surpassed four of its five KPI targets, with the CASA ratio being the only one that fell just short of the mark. This achievement is a testament to the bank’s commitment to its customers and its ability to navigate the challenging operating environment.
Strong Performance Across Key Indicators
The bank’s performance has been impressive, with an RoE of 9.3% for the nine months ending in September 2022, exceeding its target of 8.5%. Loan growth has also been strong, at 7.5%, surpassing the initial objective of 4% to 5%. The GIL ratio has been kept in check, at 1.57%, while the CTI ratio has been maintained at 44.8%, both of which are within the bank’s target ranges. The CASA ratio, although slightly short of the target, stands at 29.9%, a respectable achievement nonetheless.
Analysts at Kenanga Research have taken notice of RHB Bank’s strong performance, keeping its “outperform” recommendation on the bank with a target price (TP) of RM7. The research firm notes that the bank is on track to surpass its initial loan growth objective, driven by progress in its retail mortgage and auto financing books. Additionally, the bank has expressed ambitions to expand its regional operations in Singapore and Cambodia, which could further boost its growth prospects.
Expansion Plans and Growth Prospects
RHB Bank’s plans to expand its regional operations are a significant development, as it looks to tap into new markets and diversify its revenue streams. Although the bank’s presence in Singapore and Cambodia is currently relatively small, accounting for less than 15% of its total loans, the potential for growth is substantial. With a strong foundation in Malaysia, the bank is well-positioned to leverage its expertise and resources to drive expansion in these new markets.
CGS-CIMB Research has also weighed in on RHB Bank’s prospects, predicting a modest 2.4% year-over-year growth in the bank’s fourth-quarter net profit. This growth is expected to be supported by the ongoing expansion in net interest margin from overnight policy rate (OPR) hikes. The research firm has maintained its “add” rating on the bank, with a TP of RM7.62 per share.
Looking Ahead
As RHB Bank continues to make progress towards its KPI targets, it is likely that the bank’s performance will remain a key area of focus for analysts and investors. With its strong track record and ambitious expansion plans, the bank is well-positioned for future growth. As the financial year comes to a close, it will be important to watch how RHB Bank navigates the challenges and opportunities that lie ahead, and how its performance impacts the communities it serves. In the coming months, investors will be keenly watching the bank’s progress, particularly in relation to its loan growth and expansion plans, as it strives to build on its current momentum and achieve long-term success.
