KUALA LUMPUR: Maybank Investment Bank Research has raised its FY17-FY19 earnings for RCE Capital Bhd
by 15-21% and also projects higher return on equity (ROEs) of 15-16% over this period.
The research house said on Thursday that the new projections were following consistently strong earnings in 3QFY3/17, aided by still robust net loans growth of about 14% on-year and net interest margin (NIM) expansion, mitigated in part by higher credit costs.
It maintained its Buy call on the counter with a higher target price of RM1.95 from RM1.60.
RCE Capital, which is a financial services firm which provides loans primarily to government servants, saw 3QFY17 core net profit come in at RM16.5mil, a 27% increase on-year, and 10% lower on-quarter, bringing 9MFY17 core net profit to RM52.4mil, which is a 61% jump on –year.
“This was above expectations at 98% of our previous full-year forecast with the outperformance coming from better-than-expected interest margins.
“Core net profit slipped 10% on-quarter on the back of higher credit costs, mitigated in part by higher net interest margins,” the research house noted.
Taking into consideration the still strong momentum in earnings, it raised its FY17, FY18 and FY19 earnings by 21%, 16%, and 15% respectively.
While it trimmed its FY17-19 loan growth expectations to 11-13% from 11- 16% previously, the research house also raised its interest margin estimates and lowered its credit cost assumptions to reflect a still benign credit environment.
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