Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on February 22, 2021 - February 28, 2021

AFTER more than 15 years as RHB Bank Bhd chairman, Tan Sri Azlan ­Zainol will be retiring from the country’s fourth-­largest lender by assets at the end of this month, according to several sources familiar with the matter.

Azlan, a former CEO of the Employees Provident Fund (EPF), will join Malaysia Building Society Bhd as its new chairman, the sources say. MBSB had recently said in a stock exchange filing that it would announce a new chairman on March 1. Its previous chairman, Tan Sri Abdul Halim Ali, 77, retired on Feb 6.

Market speculation is that Datuk Mohamad Nasir Ab Latif will be the one to succeed Azlan as chairman of RHB Bank. Mohamad Nasir, former deputy CEO of the investment division at EPF, has been a non-independent non-executive director at RHB Bank since last March. He retired from EPF in December 2019 and is chairman of RHB Islamic Bank Bhd.

EPF holds majority stakes in both RHB Bank (42.08%) and MBSB (65.39%).

This would mark the second change in bank chairmanship in recent months. Datuk Mohaiyani Shamsudin retired as chairman of Malayan Banking Bhd last November and was replaced by former Telekom Malaysia Bhd group CEO Tan Sri Zamzamzairani Mohd Isa.

Azlan, 70, has been an influential figure at RHB Bank, having joined as board representative of the EPF and eventually becoming its chairman in late July 2005. He was EPF CEO for 12 years until he retired in April 2013.

Azlan oversaw the major developments at the bank over the years, including its merger with the OSK group’s investment bank in 2013, which gave the group a regional investment banking presence.

During his time, there were also several failed merger attempts with other banks, the most recent being one with AMMB Holdings Bhd in 2017. In early 2015, a three-way merger between the RHB group, CIMB Group Holdings Bhd and MBSB was called off after months of negotiations.

There have also been changes in RHB Bank’s management recently. The bank appointed Nik Rizal Kamil Nik Ibrahim Kamil, a former executive director of Khazanah Nasional Bhd, as its chief financial officer on Feb 2. Nik Rizal took over from Syed Ahmad Taufik Albar, who was redesignated as the head of group international business.

Robert Huray, CEO of the investment banking unit RHB Investment Bank Bhd, also left the bank this month. Bloomberg, citing sources, reported last month that he was joining tycoon Robert Kuok’s Kuok Group to oversee its investments in Southeast Asia.

Datuk Khairussaleh Ramli has led RHB Bank as its managing director since December 2013. He was made group MD/CEO of the RHB banking group in May 2015.

Azlan’s impending departure comes at a time when RHB Bank is in a strong position to weather the fallout of the Covid-19 pandemic. Its common equity tier-1 ratio, a key measure of a bank’s financial strength, was the highest among local banks at 16.3% at group level and 15.1% at bank level as at end-September 2020.

Its net profit for the first nine months of the financial year ended Dec 31, 2020 (FY2020) stood at RM1.59 billion, down 14.4% year on year, owing to a net modification loss of RM392.4 million arising from the six-month loan moratorium and higher allowances for credit losses. Revenue fell 5.8% y-o-y to RM9.51 billion.

Nevertheless, its core net profit of RM1.26 billion — minus the one-offs of the modification loss and the sale of RHB Securities Singapore in the third quarter — came in above analysts’ expectations, at 80% of consensus estimates for the full year.

“With strong capital ratios, we hope for better dividends than estimated, while the bank’s proposed dividend reinvestment plan (DRP) could translate to better future payouts,” Maybank Investment Bank Research says in a Feb 15 report on the bank. It had a “buy” call on the stock with a target price of RM6.50.

Its DRP plan is pending Bank Negara Malaysia’s approval. Last December, RHB Bank declared an interim dividend per share of 10 sen. “We have conservatively assumed a payout ratio of 40% in FY2020 (50% in FY2019), which translates to 19.9 sen,” says Maybank IB.

Bloomberg data shows that most analysts who track RHB Bank currently have a “buy” recommendation, with the average target price being RM6.14. The stock has shed 7.2% over a year, closing at RM5.42 last Friday, giving it a market capitalisation of RM21.73 billion.

 

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