RHB Bank pays out all-time high dividend

RHB Bank Bhd ended the year within the expectations of the market with a surprise on the dividend front. 

The group, calling upon the Employees Provident Fund (EPF) as its largest shareholder, on Feb 27 declared an interim dividend of 25 sen, bringing the full-year payment of 40 sen, or about 60% payout, which is an all-time high. 

The quantum was ‘way above’ its expectation, tagged at 32 sen which was closer to its historical average payout of 50%, according to Kenanga Research in a note released last week. 

“Higher payouts could be hinted going forward with the group having more than sufficient capital buffers. Fundamentally, the group would share the same industry-wide challenges but believes is in the right position to write back more overlays,” it said. 

In light of brighter dividend potential, the research note said the stock now appears to be a leading dividend yield candidate with yields averaging above 7% at current price levels. 

“This could be further lifted should the group decide to release its hefty Common Equity Tier 1 portfolio to reward shareholders further. At the meantime, the stock will still likely be monitored closely due to its tie-in with Axiata Group Bhd-Boost in relation to the upcoming launch of its new digital bank in the near future,” it said. 

RHB Bank’s net profit for the fourth quarter ended Dec 31, 2022 (4Q22) rose 22% to RM772.1 million from the same period the year before, mainly due to higher net fund-based and non-fund-based income. 

In its bourse filing, the bank said earnings were also helped by the absence of modification loss and lower expected credit losses. 

Revenue for the quarter under review also jumped 37% to almost RM3.95 billion on the back of previous revenue of RM2.89 million. 

EPF has a 41.6% stake in RHB, followed by OSK Holdings Bhd (10.1%) and Amanah Saham Nasional (5.9%). 

Kenanga Research has an ‘Outperform’ call on the stock, with a target price of RM7.10. RHB Bank ended last Friday’s trading at RM5.72, giving it a market capitalisation of 24.3 billion. TMR 

  • This article first appeared in The Malaysian Reserve weekly print edition