KUALA LUMPUR (July 20): An industry reform could boost RHB Bank Bhd’s (KL:RHBBANK) capital position, opening the door for initiatives to optimise the excess buffers at the fourth-largest Malaysian bank, an analyst said.

Basel III reforms are expected to lift RHB’s common equity tier-1 (CET1) ratio — a key measure of a bank’s financial strength and ability to absorb losses — by about 100 basis points from Jan 1, 2028, Maybank Investment Bank said in a note.

“RHB has yet to announce any form of capital management plan, but we would not preclude such an event, given the group’s decent capital levels and the expected enhancement,” Maybank Investment said.

At the end of March, RHB’s CET1 ratio was a comfortable 14.7% at the group level and 13.5% at the bank level — much higher than the minimum regulatory requirement of 4.5% under Basel III.

Reforms to Basel III, sometimes referred to as Basel IV, were introduced to make banks safer after the 2008 global financial crisis by requiring more capital, adequate liquidity and better risk management.

The phasing in of an output floor, however, will limit how low the perceived risks can go, resulting in the gain in capital position by about 50 basis points, according to Maybank Investment.

For now, the forecast is 60% dividend payout ratio, the research house said, noting that indications of more proactive capital management, either through special dividends or higher payout ratios, would be positive for sentiment.

The current dividend yield of 5.7% for 2026 is attractive, the research house added.