RHB Bank Berhad (RHB Bank) has reported a 2Q24 core net profit of RM722 million, reflecting an 11% decline year-on-year (YoY) and a 1% decrease quarter-on-quarter (QoQ). This brings the bank's 1H24 core net profit to RM1.45 billion, a 7% drop YoY, but within expectations at 50% of the full-year estimate and 51% of the consensus. The bank's loan growth remains robust at 6.4% YoY, while its Net Interest Margin (NIM) improved by 6 basis points QoQ. Despite these positive signs, a reversal in loan loss provisions contributed to a 7% YoY contraction in net profit.

Analysts at MIDF, Kenanga and Maybank have responded positively to RHB Bank's updated guidance. RHB Bank has received an upgrade to a BUY rating from the analysts, with a revised target price of RM6.80, up from RM5.90. This upgrade reflects a 15% increase and is supported by a dividend yield of approximately 6.8%. Similarly, an analyst maintains an OUTPERFORM rating, holding a target price of RM7.25, citing improved asset quality and an optimistic loan trajectory. Another analyst also maintains a BUY call with a revised target price of RM6.60, reflecting a positive outlook on the bank's asset quality and loan growth projections.

Looking ahead, management said it has adopted a more optimistic outlook for the second half of 2024 (2H24), revising its full-year loan growth target to 6.5-7.0% from the previous 4.5%. The NIM guidance has also been raised from 1.8-1.9% to 1.88-1.90%. However, the bank's loan loss coverage remains relatively low at 70%, despite improvements including regulatory reserves.

The bank's performance in 1H24 aligns with these optimistic projections. Despite challenges in asset quality, particularly in international portfolios, RHB Bank's strong loan growth and stable NIMs are expected to support future earnings. The improved outlook for the second half of the year, combined with a robust dividend yield, makes RHB Bank an attractive investment prospect.