Multiple drivers to lift RHB’s 2H25 profits

PETALING JAYA: RHB Bank Bhd is entering the second half of financial year 2025 (2H25) with a confluence of earnings catalysts that could power record profits and re-rate its stock, says CGS International (CGSI) Research.

The report highlighted five key catalysts that are expected to lift earnings in 2H25.

These catalysts include the release of unrealised gains from investment securities and steady fee income from new bancassurance and bancatakaful tie-ups.

There is also a potential write-back from RHB Bank’s exposure to Vantris Energy Bhd, interest income from the banca access fee, and cost reductions under its transformation plan.

CGSI Research pointed out that the first major earnings boost could come from the release of unrealised gains from its fixed-income securities portfolio.

“The group stated that it is sitting on huge unrealised gains from its fixed-income securities due to the increases in the value of these securities arising from the decline in bond yields,” it said.

The second catalyst is the long-term income stream from RHB’s new 20-year banca agreements with Tokio Marine Life Insurance Malaysia and Syarikat Takaful Malaysia Keluarga Bhd.

The research house said RHB Bank guided that the banca deals will contribute RM37.6mil net yearly in the first year, rising to RM49.4mil from the second year onward.

It added that the amortisation of the RM1.3bil fee from the third quarter of financial year 2025 onwards represents a “new earnings catalyst, sustained for the next 20 years”.

A third potential upside lies in a possible write-back from its exposure to Vantris Energy.

On Sept 26, RHB Islamic Bank received 164.6 million Vantris shares and 177.4 million redeemable convertible unsecured Islamic debt securities as part of a debt settlement.

“We think that there could be some write-back in loan loss provisioning for RHB Bank from its exposure to Vantris Energy.”

CGSI Research estimated a potential write-back of RM201.8mil, translating to an after-tax impact of RM153.4mil on net profit.

The fourth catalyst is incremental interest income from the RM1.3bil banca access fee.

It said assuming a 3% yield, RHB Bank could earn around RM30mil per annum.

“This will partly offset the pressures on RHB Bank’s net interest margin from the cut in overnight policy rate on July 10, 2025.”