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RHB Bank Berhad: RHB Deepens Insurance Ambitions
RHB Bank hosted an analyst briefing yesterday to elaborate on its newly announced 20-year bancassurance partnership with Tokio Marine Life Insurance Malaysia (TMLM), Syarikat Takaful Malaysia Keluarga (STMKB), and its wholly owned general takaful subsidiary, Syarikat Takaful Malaysia Am (STMAB).
Stronger Platform via a “ONE Unified Banca Collective” Model
The agreement, effective 1 August 2025, will see RHB hold exclusive rights to market, distribute, and promote TMLM and STM’s full suite of life insurance and takaful products nationwide, across its entire physical and digital network. The partnership introduces a “ONE Unified Banca Collective” model—an integrated, one-stop operational framework involving coordination between all three insurance partners to streamline processes and enhance customer experience.
Multi-Pronged, Value-Accretive Strategy
Management views the partnership as a strategic enabler to strengthen its overall customer proposition. On the credit side, it allows the bank to bundle insurance with its lending products, particularly in the retail and SME segments. Management reaffirmed its 7% CAGR retail loan growth target under PROGRESS27 and sees additional potential in SMEs, targeting 8.3% annual growth over the next three years by embedding commercial insurance solutions within business banking offerings.
Beyond credit, the partnership opens up fee-based income opportunities in the underpenetrated non-credit segment. With insurance penetration across RHB’s customer base still below 5%, management sees significant headroom for scaling. Leveraging the bank’s extensive customer touchpoints, trust, and digital capabilities, including data analytics and AI for personalised product recommendations, both RHB and its insurance partners aim to boost take-up rates and drive higher cross-sell efficiency.
Financial Impact
The newly signed distribution agreements mark a continuation of RHB’s long-standing partnerships with TMLM, dating back to 2010, and STMKB, along with STMAB, which have been bancatakaful partners since 2015. This continuity preserves the operational synergies built over the years, with a high degree of integration already in place. Over the past five years, RHB’s bancassurance and bancatakaful operations have delivered a solid 8.2% CAGR in total sales.
The refreshed agreements are expected to be earnings accretive. RHB will receive a Total Access Fee of up to RM1.3bn over the duration of the partnership, translating into annual PBT and net profit contributions of approximately RM65mn and RM49mn, respectively. However, after accounting for the impact of upfront professional and ancillary costs for the first year, pro-rata net profit recognition is expected to be lower at around RM15mn.
Additionally, the Total Access Fee includes a performance-based variable component of up to RM315mn, predicated on RHB achieving pre-agreed KPIs over the initial three years, with a lump-sum payout expected in the fourth year. Imputing this guidance, we have revised our FY25/26/27 net profit forecasts slightly higher to RM3,310.4/3,554.5/3,862.2mn from RM3,295.8/3,504.1/3,810.6mn.
Partnership a Strategic Fit
We remain optimistic about this new partnership as it marks a meaningful step forward in RHB’s efforts to build diversified and recurring, non-interest income while deepening customer engagement. Aligning with the group’s PROGRESS27 strategy, the “ONE Unified Banca Collective” model could potentially support a more diversified revenue mix and strengthen its insurance distribution capabilities. We also believe that the continued collaboration with experienced and reputable partners such as Tokio Marine and Takaful Malaysia would strengthen product credibility and better enhance RHB’s ability to deliver tailored financial solutions for its customers. In our view, this strategic alliance positions RHB well for sustainable long-term growth.
Valuation and Recommendations
We maintain TP at RM7.52. Our valuation is based on an implied PBV of c. 0.88x, calculated using the Gordon Growth Model and incorporating a 3% ESG premium. BUY reiterated on RHB.
Financial Summary (RMmn)
Profit & Loss Statement
| FYE 31 Dec (RMm) | FY23 | FY24 | FY25E | FY26E | FY27E |
|---|---|---|---|---|---|
| Interest income | 9,473 | 10,134 | 10,748 | 11,255 | 11,892 |
| Interest expense | (5,914) | (6,265) | (6,599) | (6,881) | (7,176) |
| Net interest income | 3,560 | 3,869 | 4,149 | 4,374 | 4,716 |
| Islamic banking income | 2,366 | 2,176 | 2,263 | 2,354 | 2,448 |
| Total non-interest income | 1,844 | 2,560 | 2,810 | 3,110 | 3,389 |
| Total income | 7,770 | 8,605 | 9,222 | 9,837 | 10,553 |
| Overhead expenses | (3,689) | (4,021) | (4,263) | (4,518) | (4,790) |
| Operating profit | 4,081 | 4,583 | 4,959 | 5,319 | 5,764 |
| Loan loss provisioning | (302) | (537) | (569) | (604) | (640) |
| Associates contributions | (26) | (26) | (29) | (32) | (35) |
| Profit before tax | 3,753 | 4,020 | 4,361 | 4,683 | 5,089 |
| Taxation and MI | (947) | (900) | (1,051) | (1,129) | (1,226) |
| Net profit | 2,806 | 3,120 | 3,310 | 3,554 | 3,862 |
Balance Sheet Statement
| FYE 31 Dec (RMm) | FY23 | FY24 | FY25E | FY26E | FY27E |
|---|---|---|---|---|---|
| Cash and short-term funds | 14,145 | 11,552 | 11,653 | 10,716 | 11,410 |
| Deposit with Fls | 889 | 811 | 852 | 894 | 939 |
| Marketable securities | 79,910 | 87,648 | 91,428 | 95,380 | 99,510 |
| Total current assets | 94,944 | 100,011 | 103,933 | 106,990 | 111,859 |
| Net loans and advances | 219,563 | 234,968 | 246,756 | 260,335 | 274,649 |
| Fixed assets | 1,066 | 1,018 | 1,018 | 1,018 | 1,018 |
| Intangible assets | 3,467 | 3,488 | 3,488 | 3,488 | 3,488 |
| Other long-term assets | 9,652 | 10,430 | 9,742 | 10,008 | 10,259 |
| Total assets | 328,692 | 349,915 | 364,937 | 381,839 | 401,273 |
| Customer deposits | 245,083 | 249,565 | 259,548 | 269,930 | 280,727 |
| Deposits from other Fls | 17,022 | 27,205 | 28,293 | 29,425 | 30,602 |
| Repurchase securities | 9,478 | 14,671 | 14,671 | 14,671 | 14,671 |
| Bills and acceptances | 810 | 262 | 288 | 317 | 348 |
| Borrowings | 12,657 | 12,577 | 12,577 | 12,577 | 12,577 |
| Other liabilities | 12,730 | 13,103 | 15,505 | 19,136 | 24,609 |
| Total liabilities | 297,781 | 317,383 | 330,882 | 346,056 | 363,535 |
| Total equity + MI | 30,911 | 32,531 | 34,055 | 35,783 | 37,739 |
| Total liabilities + equity | 328,692 | 349,915 | 364,937 | 381,839 | 401,273 |
Key Financial Ratios and Margins
| FYE 31 Dec | FY23 | FY24 | FY25E | FY26E | FY27E |
|---|---|---|---|---|---|
| Return and efficiency | |||||
| ROE (%) | 10.0% | 10.5% | 10.6% | 10.9% | 11.2% |
| ROA (%) | 0.9% | 0.9% | 0.9% | 1.0% | 1.0% |
| Fee-based/total income (%) | 11.2% | 11.3% | 11.6% | 12.0% | 12.3% |
| Non-interest/total income (%) | 23.7% | 29.7% | 30.5% | 31.6% | 32.1% |
| Cost-to-income (%) | 47.5% | 46.7% | 46.2% | 45.9% | 45.4% |
| Balance sheet | |||||
| Loans growth (%) | 4.8% | 6.9% | 5.5% | 5.5% | 5.5% |
| Impaired loans ratio (%) | 1.7% | 1.5% | 1.5% | 1.5% | 1.5% |
| Loan loss reserves (%) | 71.7% | 78.6% | 108.6% | 108.3% | 108.0% |
| Deposit growth (%) | 7.9% | 1.8% | 4.0% | 4.0% | 4.0% |
| LD ratio (%) | 89.6% | 94.2% | 95.1% | 96.4% | 97.8% |
Investment statistics
| FY23 | FY24 | FY25E | FY26E | FY27E | |
|---|---|---|---|---|---|
| PER (x) | 9.6 | 8.7 | 8.2 | 7.6 | 7.0 |
| PBT growth rate (%) | -9.2% | 7.1% | 8.5% | 7.4% | 8.7% |
| EPS (sen) | 64.3 | 71.5 | 75.9 | 81.5 | 88.5 |
| EPS growth rate (%) | 4.8 | 11.2 | 6.1 | 7.4 | 8.7 |
| BV per share (RM) | 7.0 | 7.4 | 7.8 | 8.2 | 8.6 |
| P/BV (X) | 0.88 | 0.83 | 0.80 | 0.76 | 0.72 |
| DPS (sen) | 40.0 | 43.0 | 45.0 | 45.0 | 45.0 |
| Dividend yield (%) | 6.5% | 6.9% | 7.3% | 7.3% | 7.3% |
| Dividend payout (%) | 62.2% | 60.1% | 59.3% | 55.2% | 50.8% |
Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
BUY: Total return of the stock exceeds 12%.
HOLD: Total return of the stock is within the range of 7% to 12%.
SELL: Total return of the stock is lower than 7%.
Not Rated: The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Scoring | Environmental | Social | Governance | Average |
|---|---|---|---|---|
| ★★★ | ★★★★ | ★★★★ | ★★★★ | |
| Remark | RHB has adopted a new position on NDPE in addition to adopting the “No Coal” commitment. Moreover, the bank has accelerated the offering of Sustainable Financial Services products and solutions, engaged clients and customers in advocating for the transition to clean energy and green activities, and fostered the incorporation of ESG/sustainable practices into their respective businesses and operations. The company intends to raise RM20bn in sustainable financial services by 2026 and aims to achieve carbon neutrality by 2030 (from RM1bn currently). | Achieved an Employee Engagement Score of 90%, on par with the Malaysian financial services industry average. Invested RM24.6mn in the upskilling and reskilling of employees, with a total of 606,623 training hours in 2021. Employees raised more than RM370k for the RHB Humanitarian Fund. At the same time, the group allocated RM800k to the RHB Natural Disaster Fund in 2021 to assist employees who were financially affected by COVID-19 and the floods in December 2021. RHB spent RM689.8mn (91%) to promote local businesses on 523 local suppliers (93%). In 2021, RHB maintained 30% of women’s representation on RHB Bank’s Board of Directors. Women held 53% of Management positions and 28% of Senior Management positions, reflecting diversity and inclusivity within the group. | RHB recently announced the establishment of its Board Sustainability Committee, whose primary role is to assist the Board of Directors in driving the group’s sustainability and climate-related agenda and providing oversight of material ESG matters across the group’s business strategies, operations and decision-making process. RHB Bank’s board composition is fairly well represented, with 63% independent directors. |
| ★★★★★ (≥80%) | Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. | +5% premium to target price |
| ★★★★ (60-79%) | Above adequate integration of ESG factors into most aspects of operations, management and future directions. | +3% premium to target price |
| ★★★ (40-59%) | Adequate integration of ESG factors into operations, management and future directions. | No changes to target price |
| ★★ (20-39%) | Have some integration of ESG factors in operations and management but are insufficient. | -3% discount to target price |
| ★ (<20%) | Minimal or no integration of ESG factors in operations and management. | -5% discount to target price |
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Wednesday, August 06, 2025, the analyst, Wong Li Hsia, who prepared this report, has interest in the following securities covered in this report: (a) nil
