This article first appeared in The Edge Malaysia Weekly on February 17, 2025 - February 23, 2025

RHB Bank Bhd (KL:RHBBANK) head honcho Datuk Mohd Rashid Mohamad’s contract has been extended by another three years, sources say, ahead of the group unveiling its new three-year corporate strategy later this month.

This would be the second term for Rashid at the country’s fourth-largest banking group by assets. He took on the role of group managing director/group CEO on April 1, 2022.

“Rashid’s contract has been renewed, effective April 1 this year,” a source tells The Edge.

RHB Bank declined comment when contacted.

Sources say the bank is currently identifying a suitable candidate to replace Datuk Fad’l Mohamed, its managing director of group wholesale banking. Fad’l, who held the role for only about 13 months, will be leaving the bank to take up the post of Bursa Malaysia Bhd CEO on March 1, succeeding Datuk Muhamad Umar Swift, who is retiring.

It is understood that both internal and external candidates are being considered for the post.

Group wholesale banking comprises several key businesses within the group, including corporate banking, investment banking, treasury and global markets, asset management, commercial banking and transaction banking.

RHB Bank is slated to release its financial results for the final quarter of the financial year ended Dec 31, 2024 (4QFY2024) on Feb 27. It is, on the same day, expected to unveil its new strategic plan for FY2025-FY2027.

The previous strategy, code-named “Together We Progress 24” (TWP24), concluded in FY2024.

There will be much interest as to what extent RHB Bank has managed to meet the targets it had set for itself in 2022 under TWP24. A key target was to hit a return on equity (ROE) of 11.5%.

In an interview with The Edge last May, Rashid acknowledged that the group may not be able to meet some TWP24 financial targets.

“When we were developing TWP24 in 2022, we didn’t expect [such] elevation in cost of funding,” he said, referring to the challenge of higher funding costs faced by the entire banking industry since 2023 as a result of fierce competition for deposits.

Although the group has since revised its ROE target for FY2024 to at least 10%, Rashid said he was nevertheless pushing his team to get ROE to as close as possible to the official TWP24 target of 11.5%. “We will strive to narrow the gap or at least do better than [FY2023],” he said.

RHB Bank’s ROE stood at 9.5% in FY2023, and 9.8% in 9MFY2024. Analysts expect its ROE to come in at close to 10% for the full year. They see it making a net profit of around RM3 billion in FY2024, which would make it its fourth consecutive year of earnings growth. It made RM2.81 billion in FY2023.

In 9MFY2024, its net profit stood at RM2.29 billion, 2.9% higher year on year, driven by higher total income which was partially offset by an increase in operating expenses and loan provisions.

“For the upcoming quarterly results (4QFY2024), we are likely to observe seasonal net interest margin slippage, strong loan growth, softer core non-interest income and lower net credit cost. We think RHB Bank is able to print commendable 4QFY2024 earnings of RM750 million to RM800 million versus its record peak in 3QFY2024 of RM833 million,” says Hong Leong Investment Bank Research in a Feb 14 results preview note. It expects RHB Bank’s full-year net profit to come in at RM3.04 billion. 

The research house maintains its “buy” call and target price of RM7.55 on RHB Bank, based on an FY2026 price-to-book (P/B) ratio of 0.93 times, with assumptions of an ROE of 9.4%.

“This is in line with its five-year pre-pandemic P/B mean of 0.88 times and sector’s average of 0.95 times. All in, we continue to like RHB Bank for its appealing dividend yield of circa 6% and it is relatively inexpensive among the banking components within the [FBM] KLCI,” it says.

Bloomberg data as at Feb 14 shows that 10 analysts have RHB Bank on “buy”, while eight have it on “hold”. There were no “sell” recommendations.

The 12-month target price was RM7.22, which suggests further upside from its closing price of RM6.55 on Feb 14. At that price, RHB Bank has a market value of RM28.55 billion. Over the last 12 months, the stock has gained 24.6%, hitting its highest close of RM6.78 on Nov 27 last year.

RHB Bank’s largest shareholder is the Employees Provident Fund, which held a 39.51% stake as at Feb 10, followed by businessman Tan Sri Ong Leong Huat — via OSK Holdings Bhd (KL:OSK) — with 10.27%.

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