PETALING JAYA: RHB Bank Bhd is likely to deliver “dividend surprises” due to its high capital ratios.

       Kenanga Research, which has chosen the lender as one of its “top picks” said the stock’s high capital ratios, whereby its common equity tier-one stands at 17%, may allow to group to deliver more dividend surprises in spite of management’s existing guidance.

       “Additionally, the group’s recent digital banking licence win could serve as a sentiment booster to the group as it nears the launch of its new entity and digital offerings,” the research house told its clients in a report.

       Citing a briefing with the management of the bank, Kenanga Research said the lender sought to cement medium-term targets with its newly introduced three-year Together We Progress or TWP24 initiative where it aims to elevate group return on equity to 11.5%.

       This will be achieved by more personalised customer engagement and retention while building integrated overseas business channels, it pointed out.

       “Sustainability and diversity would also be a key focus during the next three years.”

       Meanwhile, the group’s immediate FY22 targets should still be on track to be achieved, it said.

       Notably, no dividend was declared during the quarter under review, which was expected, as the bank typically pays its dividends during stipulated quarters, twice a year.

       In its report, TA Research, citing the same briefing with management, said despite the challenging operating environment, management is cautiously optimistic that FY22 will be a better year than FY21, thanks to stronger loan growth in mortgage, auto finance, small medium enterprises and its Singapore operations, rising interest rates and lower provisions.

       “To increase fee income, management anticipates a greater focus on wealth management, “ TA Research said.

       It has raised its target price for RHB to RM6.90 from RM6.40.