RHBCAP ... Sept09

RHB CAPITAL's Net Profit for 2QE Jun 2009 rose 11% to RM301.5m exceeding analysts' expectations. The rise was due to strong growth in Net Interest Income, higher Income from its Islamic banking business and higher writeback of Impairment Losses.

INTERIM DIVIDEND DECLARED
The Group declared an Interim Dividend of 5 sen compared with FY08's 9 sen.

SLIGHT IMPROVEMENT IN NPLs TO 2.5%
The Bank's NPL Ratio improved to 2.5% from 2.6% in 1QE Mar 2009, while its capitalisation stood at 9.8% for Core Capital and 13.7% for Risk-Weighted Capital Ratio.

RESEARCH HOUSE VIEWS
HWANGDBS VICKER RESEARCH said Aug 26, 2009 that due to better results " .... We raised FY09-11F earnings by 24%-30% after imputing lower Operating Expenses and stronger non-interest income, in view of healthier capital markets going forward ....". The research house also expects a sustainable 12% ROE, 2% Long-Term Growth and 10% COE.

OSK RESEARCH said that RHBCap's 1HE Jun 2009 results, which saw a 7.4% rise in Net Profit to RM530.1m, were 20.6% and 25.9% above consensus and the research house's full-year estimates, respectively.

The growth was driven by lower-than-expected loan-loss provisions, an uptrend in net interest margins, strong Islamic banking earnings growth, and its efficient cost-management efforts.

" .... More importantly, underlying core performance remained robust despite the challenging macro-environment, with pre-provision profits expanding 9.8% YoY and 25.7% QoQ ...." it said.

OSK RESEARCH's EARNINGS FORECAST
OSK RESEARCH raised FY09 and FY10 Earnings Forecasts for RHBCAP by 27.5% and 24.1%, respectively, as Loans Growth forecasts were raised for FY09 and FY10 to 5.5% and 7%, from 4% and 6%, respectively.

The higher earnings forecasts were also due to lower credit cost assumptions for FY09 and FY10, to 110 basis points (bps) and 90 bps, from 141 bps and 120 bps points, respectively, as well as on the back of a recovery in Non-Interest Income, to reflect a marginal growth of 3.5%, versus its original contraction estimate of 22.6%, driven by improving capital and debt market deal flows.

OSK RESEARCH also said that RHBCAP's management had indicated local deal flows were gradually improving due to the current recovery in capital markets, while its debt origination deal pipeline was also on the mend.

LOANS GROWTH & LOAN LOSS COVERAGE
The Banking Group recorded a Loans Growth at 8.5% YoY as at Jun 30, 2009 compared with the industry's 8.3%, supported by an expansion in residential mortgages, auto loans, and non-residential mortgages, although working capital loans inched down.

The Bank also reported stable Loan Loss Coverage at 86% in Jun 2009 compared with 85% in Mar 2009. " .... We are cheered by the surprisingly strong 1HE Jun 2009 performance, especially the against-sector improvement in Net Interest Margins and the stable NPLs in 2QE Jun 2009 ...." said CIMB RESEARCH.