RHB Bank’s financial improvements could boost share price #02_DecDecember 2, 2019
This article first appeared in The Edge Financial Daily, on November 12, 2019.
– A + A RHB Bank Bhd
(Nov 11, RM5.69)
Maintain add with an unchanged target price (TP) of RM7: Last Friday, RHB Bank Bhd hosted a Group Retail Banking Day (GRBD) with its head of group retail banking, Rakesh Kaul.
We are more positive on RHB Bank following the GRBD as we gathered that it has been gaining market share in the retail banking business and that it has launched various innovative retail banking products.
RHB Bank is focusing on key geographical areas for its residential mortgages, due to the sustained property demand in these areas.
For instance, 90% of its mortgages were for properties in three major areas — 71% for the Klang Valley, 12% for Johor and 7% for Penang.
The average ticket size of its residential mortgages is RM420,000, signifying its focus on the lower end of the property market.
These include: i) a multi-currency Visa debit card, which supports 13 currencies; ii) which allows customers to apply for the opening of current accounts, savings accounts online; and iii) [email protected] Solutions, a seamless account opening system for companies.
The strong growth in its retail banking business is another testimony to the success of RHB Bank’s transformation programme, which is one of the key reasons for our “add” call on the stock.
It also remains our top pick for the sector.
Our FY19-21 earnings per share forecasts and dividend discount model-based TP of RM7 remain unchanged.
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