PETALING JAYA: RHB Bank Bhd appears to be well positioned to navigate any potential rise in interest rates moving forward.

       This is due to the group’s high variable rate loans mix of 87% of total loans book at the moment.

       “This is indicative of the group’s strong financing repricing ability from the eventual rate hike, which we expect to come into effect in the second half of 2022,” Kenanga Research said.

       The research house, which had a meeting with the bank’s management recently, said that RHB Bank hopes to record 4%-5% growth in its loans books this financial year (FY) year from 6.7% in FY21, helped by the economic recovery.

       The bank is expecting mortgages and hire purchases to lead the loans growth, but it also noted that small and medium enterprises performances are still waning in certain sectors such as hospitality and tourism although they might regain their strength as borders reopen.

       “The Singapore segment which consists some 25% loans growth in FY21 is expected to be a strong performer from its earlier-than-expected reopening but perhaps at a more moderate pace going forward,” it said.

       Its management had also noted that repayment assistance makes up about 6% of its outstanding loans.

       The group is also still hopeful in its digital banking licence bid.

       Its management has proposed a few key executions should it eventually secure a digital banking licence with its partner in Axiata Digital or Boost.

       “For the moment, funding is likely to be parallel to their respective 40:60 stake in the joint venture, with an aspiration to take up the asset size ceiling of RM3bil in the digital bank’s foundational phase,” it said.

       It noted that the group will mainly target the underserved communities with non-traditional products such as micro loans looking to uplift economic development and transition these customers to more sophisticated banking products as they mature.

       Meanwhile RHB Bank has as of end-FY21 accumulated RM819mil of management overlays as provisional buffers.

       “Despite seeing favourable recoveries, management is abstaining from prematurely writing back its reserves and may opt to refresh its allocation as uncertainties still persist,” Kenanga Research said.

       The research house had maintained its “outperform” call with a target price of RM6.95

       “While the FY22 bumper dividend payout of about 60% is not likely to repeat itself, the group’s historical average of 50% still offers a modest 5%-6% yield to investors,” Kenanga Research said.