PETALING JAYA: RHB Bank Bhd reported results that were mostly within analyst expectations but management is expecting some challenges in financial year 2022 (FY22) with rising competition for loans and deposits, according to Kenanga Research.

       It said in a report to clients that RHB is cautious on its prospects for this year.

       Citing information from its meeting with the lender’s management, the research house said the bank “played a milder note with caution that traction could be slowing for the group”.

       “After a commendable 7% growth in loans this year, management projects a slowing momentum on this front with a 4%-5% guidance, with leads coming from the same mortgage financing,” Kenanga said.

       It said net interest margins were also expected to erode as competition for funds were becoming more prevalent, anticipating a slight normalisation to 2.11% (minus 3 basis points) but this may be offset by an overnight policy rate hike which could translate to a three-basis-point annualised impact.

       “Still, management is confident that its cost controls will remain intact. Without the implication of prosperity tax, a 10% return on equity was eyed by management but with it, an 8.5% mark is more likely,” it said.

       In its report, CGS-CIMB said RHB’s FY21 core net profit (excluding modification loss) was 8% above its projection due to higher-than-expected net interest income arising from the improvement in loan growth.

       “However, FY21 core net profit was within the market’s expectations.

       “Another positive surprise was the higher-than-expected FY21 dividends per share of 40 sen versus our projected 30 sen. This translated into a compelling dividend yield of 7% in FY21, one of the highest in the sector.”

       CGS-CIMB also said it was projecting a weak core net profit growth of 1.6% for RHB Bank in FY22, primarily due to the additional taxation under Cukai Makmur.

       “Excluding the one-off tax, RHB Bank’s FY22 core net profit growth would be higher at 13.4%, primarily underpinned by a projected 5.2% rise in net interest income and a 15.2% drop in loan loss provisions.”

       RHB saw a 43% year-on-year increase in its net profit to RM631.17mil for the fourth quarter ended Dec 31, 2021 from RM438.63mil earlier, due to lower expected credit losses.

       The bank has proposed a final dividend of 25 sen per share, comprising 15 sen cash as well as an electable portion under a dividend reinvestment plan of 10 sen per share.