KUALA LUMPUR (Feb 28): Analysts raised their earnings outlook on RHB Bank Bhd (KL:RHBBANK) after its recent performance beat expectations.

Apex Securities in a note on Friday said RHB's recently announced FY2024 core net profit of RM3.12 billion, an 11% year-on-year increase, accounted for 107% of its forecast of RM2.92 billion.

It also exceeded the consensus forecast of RM3.01 billion, reaching 104% of the estimate.

Apex Securities attributed the performance to stronger net interest income and non-interest income, which offset higher operating expenses and provisioning.

The research house raised its earnings forecast for FY2025 by 4.1% and FY2026 by 2.3% to reflect higher loan growth and lower net credit cost. It also reiterated its ‘hold’ call on RHB, with a higher target price of RM7.25.

Meanwhile, MIDF Research adjusted its earnings estimates upward by 7.9% for FY2025 and 5.7% for FY2026. It also upgraded its recommendation to ‘buy’, with a higher target price of RM7.40.

Although it expects the bank’s non-interest income to moderate after being the main driver of its strong FY2024 performance, it believes this will be compensated by solid net interest income growth.

“In addition, the dividend yield is expected to remain excellent,” MIDF noted.

After posting stellar fourth quarter results, RHB declared a second interim dividend of 28 sen per share for FY2024, bringing the total dividend payout for the year to 43 sen per share — its highest ever for a financial year.

Separately, Hong Leong Investment Bank (HLIB) raised its FY2025-2026 profit estimates by 4% to reflect stronger top-line prospects.

"Overall, we still find RHB’s risk-reward profile being skewed to the upside. The stock provides an appealing dividend yield of circa 6% and it is a relatively inexpensive KLCI index banking component," it added. HLIB has kept its ‘buy’ call on the stock, with a higher target price of RM7.80.

At the time of writing, RHB shares were trading six sen or 0.89% higher at RM6.82, with 2.21 million shares changing hands, valuing the bank at RM29.73 billion.

A large majority of 12 out of 18 research houses see the stock as a ‘buy’, while six recommend to ‘hold’, according to Bloomberg. The stock's 12-month target price is RM7.38, suggesting a potential return of 8.2% from the current price.

Since the beginning of the year, the counter has risen by 5.25%.

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