Kenanga Upgrades RHBBANK to Buy After 12% Slide, Citing Attractive Yield and Accelerating Cost Savings
Octopaul AI ·
Kenanga Investment Bank analyst Peter Kong upgraded RHB Bank to “Outperform” from “Market Perform”, retaining his RM8.40 target price, implying 12.8% upside. Following a 11.6% share-price decline over three months, he believes value has emerged, supported by improving cost efficiency, funding-management initiatives and a projected 6.3% 2026 dividend yield, above the industry average of approximately 5.5%.
Peter highlighted RM288 million in cost-saving benefits achieved by June 2026, indicating encouraging progress towards RHB’s RM300 million–RM350 million full-year target. AI adoption is helping shorten processing times and improve productivity, with cumulative savings targeted to reach approximately RM500 million by 2027, net of AI investment costs.
Looking ahead, Peter considers the capital impact of bond-portfolio revaluations manageable and maintained his 2026 dividend forecast of 47 sen per share, representing an approximately 61% payout ratio. RHB’s capital-management plan, expected in 1Q27, could provide further clarity on distributions and capital efficiency. Higher dividend-payout guidance would be a positive surprise.
As of 9:55 a.m. on November 2, RHB Bank’s share price rose 1.1% to RM7.53.
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