23 October 2020, Friday | 10:22am

AmInvestment expects RHB Bank to lower dividend payout to 40% for FY20/21

2020-10-15

KUALA LUMPUR (Oct 15): AmInvestment Research has maintained its “buy” rating for RHB Bank Bhd at RM4.34 with a fair value (FV) of RM5.70, supported by a return on equity (ROE) of 8.2% leading to a price-to-book value (P/BV) ratio of 0.8 times for the financial year ending Dec 31, 2021 (FY21).

In a note today, the research house said except for lowering its dividend payout expectations for FY20/21 to 40% from 50%, there are no changes to its earnings estimates.

“We continue to like RHB for its undemanding valuation trading at 0.6 times P/BV, its strong capital position and sizeable FVOCI (fair value through other comprehensive income) reserves of RM1.73 billion,” said AmInvestment’s Kelvin Ong.

Ong said following the six-month blanket automatic loan moratorium to assist retail and small and medium enterprise (SME) borrowers that ended on Sept 30, 2020, RHB had managed to establish contacts with 104,000 retail customers out of 201,000 vulnerable consumer loan borrowers in total.

“In terms of loan value, this cumulated to RM9.7 billion, representing 54% of total vulnerable retail loans of RM17.9 billion.

“We understand that 97,000 customers (46% of total vulnerable retail loan borrowers) failed to be contacted,” he said.

Ong said of the 104,000 retail customers contacted, 82.7% or 86,000 borrowers did not require repayment assistance.

“Meanwhile, 17.3% or 18,000 borrowers indicated their need for further repayment assistance.

“Year to date, the group has approved the restructuring and rescheduling (R&R) of loans totalling RM7 billion to 56,000 retail borrowers. This comprises largely R&R for mortgage loans (RM5.2 billion),” he said.

On dividends, Ong said payouts would be lower than the 31 sen/share (payout: 50.1%) for FY19.

“Management is targeting a dividend payout of above 30% for FY20.

“We continue to expect no interim dividend with only the final dividend to be declared for 4QFY20 (the fourth quarter ending Dec 31, 2020),” he said.

Source: The Edge Markets

 

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