Hong Leong Investment Bank Bhd (HLIB Research) maintained its HOLD call on RHB Bank Bhd with a lower target price of RM8.30 from RM9.10, citing manageable SME asset quality risks despite lingering pressure on smaller businesses.
HLIB Research said the bank remains on track to deliver steady earnings momentum, supported by resilient net interest income (NII), stable net interest margin (NIM) and improving fee income.
The research house said RHB Bank’s SME asset quality remains a key area to monitor, although management expects impairment pressure to remain contained with no signs of sharp deterioration. SME flow-down reached RM129 million in the first quarter of 2026, with RM40 million linked to proactive downgrades of non-delinquent accounts into Stage 3.
The analyst noted that around 90% of the vulnerable SME portfolio is secured through Syarikat Jaminan Pembiayaan Perniagaan (SJPP), property and corporate guarantees, which should limit potential downside risks. Management expects SME pressure to continue into the second and third quarters of 2026 before stabilising towards the fourth quarter if inflationary pressures remain controlled.
The research house said RHB Bank is recalibrating its SME strategy under Progress27 by prioritising higher-quality borrowers while expanding commercial lending. The bank is shifting towards property-backed financing, capacity-building facilities and trade-related facilities instead of relying heavily on pure working capital lending.
HLIB Research maintained that RHB Bank’s loan growth target of 5% to 6% for FY2026 remains achievable, supported by mortgage lending and commercial expansion. The bank is also expected to benefit from stronger bancassurance, wealth management and capital market activities.
However, HLIB Research said the lack of stronger catalysts and potential index weightage reduction concerns could limit share price upside, keeping its HOLD recommendation unchanged.
As of 10.07 am, RHB Bank’s stock price slips 0.24% to RM8.42.
