RHB Bank is running ahead of its own targets. The numbers from the first nine months of 2022 show a bank beating nearly every goal it set for itself. Return on equity hit 9.3%, well above the 8.5% target. Loan growth reached 7.5%, crushing the 4% to 5% objective. The gross impaired loan ratio sat at 1.57%, under the 1.7% ceiling. Cost-to-income came in at 44.8%, below the 45% limit.
Only one metric lagged. The current account savings account ratio, or CASA, fell just short of the 30% mark. That is the single blemish on an otherwise clean report card.
Group managing director and CEO Mohd Rashid Mohamad laid out the numbers during a conference call with analysts. He did not hedge. The bank is on track. The wider question is what happens next.
Kenanga Research kept its “outperform” call on the stock with a target price of RM7. The research house noted the bank looks set to surpass its initial loan growth target. The engine behind that growth is plain: retail mortgages and auto financing. Those two books are driving the expansion. It is not complicated. People are borrowing to buy homes and cars, and RHB is writing the loans.
But the bank is not stopping at the Malaysian border. Regional operations in Singapore and Cambodia are in line for expansion. The group has voiced higher ambitions for those markets. The base is small. Less than 15% of total loans come from outside Malaysia. That is a weak starting point. The bank is committed to changing it.
This is a bank that set five targets and hit four. It is now talking about beating the one it already exceeded. The 4% to 5% loan growth figure may end up looking conservative. The CEO told analysts the group looks to surpass that initial objective. Retail mortgages and auto financing are the reason.
The environment is not easy. Mohd Rashid described it as challenging. Yet the numbers suggest the bank is managing. The cost-to-income ratio is under control. Loan quality is holding up. Growth is coming from the right places.
Kenanga’s note put it plainly. The group is on track to reach most of its headline targets. That is the story. A bank that said it would do certain things is doing them. Some it is doing better than expected.
The CASA ratio is the one loose end. It matters because cheap deposits are a foundation for lending margins. Falling short there is not a crisis, but it is a miss. The bank will have to work on that.
For now, the focus is on what is working. Loan growth is strong. Asset quality is solid. Costs are contained. Regional expansion is coming. The targets for 2022 were set in a different world. The bank is outperforming them. That is the close read. Everything else is detail.
