RHB Bank Bhd - 4QFY24 results: Solid Improvement in Corporate GILs
Fri, 28-Feb-2025 07:31 am
by Samuel Woo • Apex Research

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RHBBANK (1066)

Target Price (RM)

7.250

Recommendation

Hold

Summary

  • RHB’s 4QFY24 core net profit jumped +43% yoy and remained flattish qoq to RM836m, bringing FY24 core net profit at RM3.12bn, which was deemed above our expectations but within consensus expectations, accounting for 107% and 104% of ours and consensus expectations, respectively.

  • Management’s tone: Optimistic.

  • Re-iterate our HOLD recommendation with a higher target price of RM7.25, based on FY25F GGM-PBV of 0.91x.

 

Results within expectations. FY24 core net profit at RM3.12bn (+11% yoy) came above our expectations but within consensus expectations, accounting for 107% of our core net profit forecast at RM2.92bn and was at 104% of consensus forecasted net profit of RM3.01bn.

 

YoY. 4QFY24 core net profit jumped +43% yoy to RM836m, driven by improved NII, NOII and provisioning, which offset higher OPEX charges. FY24 core net profit increased by +11% yoy to RM3.12bn, driven by stronger NII and NOII offsetting higher OPEX and provisioning.

 

QoQ. 4QFY24 core net profit remained flattish qoq, as higher NOII, and lower provisioning and tax charges offset weaker NII and OPEX results.

 

Outlook. Management seems optimistic on asset quality outlook: Two large reclassifications have helped push overall GIL ratio down by -30bps qoq to 1.47%. The corporate GIL ratio has reduced from 2.07% to 0.65%. Promisingly, RHB’s LLC is up to 78.6%, far healthier than the previous ~70% range. Going forward, management guides for further recoveries and. Group mentions that Thailand and Cambodia asset quality issues haven’t quite been resolved yet – though it is panning out within expectations. The Group also cites that building a suitable asset base is a necessity in paring down on their high CET 1 ratio. 

 

Earnings Revision. We increase our FY25F and FY26F earnings by +4.1% and +2.3% respectively to account for higher loan growth and lower NCC.

 

Valuation. Re-iterate our HOLD recommendation on RHB with a higher target price of RM7.25, based on an FY25F P/BV of 0.91x GGM-PBV valuation and 1% ESG factored premium based on 4-star ESG rating. The increase in target price is due to higher earnings expectations as well as our newly-added ESG premium. 

 

Risks. (1) Weaker-than-expected loan growth, (2) Further NIM compression, (3) Higher-than-expected NCC performance.

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