Date: 1st October 2024
Broker: UOB Kay Hian

Market Performance

RHB Bank is recommended as a “Buy” with a target price of RM6.80, while it is currently trading at RM6.18. The stock has shown a year-to-date increase of 13.4% and a year-over-year change of 14.4%. This performance indicates a strong recovery trajectory relative to its peers.

Earnings and Growth Potential

The bank is poised to outperform the sector in the second half of 2024, supported by robust pre-provision growth of 13%. RHB Bank’s earnings growth is projected at 9.1% for 2024, which reflects a positive outlook amid a challenging sector environment.

Asset Quality

RHB Bank has demonstrated stable asset quality, with its gross impaired loans (GIL) ratio remaining unchanged at 1.58% as of August 2024. This stability in asset quality is a positive indicator for the bank’s future performance, particularly given the context of potential economic uncertainties.

Strategic Positioning

The report highlights that RHB Bank is well-positioned to take advantage of any potential credit cost tailwinds. The bank’s asset quality metrics are stabilizing, which could lead to improved profitability as credit conditions enhance.

Sector Context

In the context of the broader banking sector, RHB Bank is positioned favorably, particularly when considering its high beta and strong growth metrics. This makes RHB Bank a compelling investment choice, particularly for those seeking exposure to potential sector recoveries.

Analyst Coverage

The analysis is conducted by Keith Wee Teck Keong from UOB Kay Hian, who emphasizes RHB Bank’s strong market position and growth potential within the current economic landscape.