RHB Bank has just unveiled its three-year strategic blueprint—called Progress27—and it’s aiming high. The bank is targeting a return on equity (ROE) of at least 12% by 2027, a substantial jump from the 9.8% it delivered in FY2024. Here’s what investors need to know:
What's driving RHB’s ambitious growth plans?
To hit that 12% ROE, RHB Bank must deliver consistent profit growth of around 12% annually over the next three years—faster than its historical average. How does it plan to get there?
- Cost control: Reducing expenses by RM500 million over three years by streamlining operations and improving efficiency.
- Better funding mix: Increasing low-cost deposits (CASA), aiming for at least 30% of total deposits.
- Loan growth: Targeting roughly 7% annual loan growth in Malaysia, with a focus on higher-margin loans.
- Fee income: Boosting fee-based revenues by around 10% annually through wealth management and corporate banking.
- Low credit risk: Keeping credit costs low, with credit charges below 15 basis points per year.
Beyond Profits: RHB’s ESG Push
RHB is also deepening its commitment to sustainability, raising its sustainable financing target to a hefty RM90 billion by 2027. That includes financing green energy, electric vehicles, and green buildings. This positions RHB as a leader among Malaysian banks in ESG efforts—a key appeal for responsible investors.
Long-term opportunity or wishful thinking?
If RHB achieves its goals, the rewards for shareholders could be significant, with dividends continuing to impress (currently yielding around 6.5%). Yet, the path to 12% ROE isn’t guaranteed, especially if loan growth slows, asset quality deteriorates, or fee-income targets prove too ambitious.
Bottom line for investors
RHB Bank is setting itself a tough but achievable challenge. Investors who believe in the strength of Malaysia’s economy and RHB’s ability to execute might find now a good time to consider this dividend-rich bank as a long-term holding.
Stay informed—and keep investing!
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