RHB Capital's share price dipped 14 sen or 1.78 per cent in the early session today, on the lingering risk of rising credit cost.
The stock's shares stood at RM7.71, after opening at RM7.74 with 228,100 shares transacted as at 11.45am.
HwangDBS Vickers Research said RHB Capital's loan loss coverage was at 60 per cent year-to-date as at June, while non-performing loans rose to 3.15 per cent after it booked a RM409 million specific loan impairment charge.
"We understand there is collateral, but we conservatively raised credit costs to 48 basis points in the 2013 financial year, in anticipation of higher provisions ahead.
"All in, we cut the 2013-2015 financial year earnings estimates by 4-6 per cent," it said in a note today.
The research house said the stock's current share price overhang was pricing in the concerns on further loan impairment and provision charges, which will take a toll on earnings.
"However, we believe there is value in its enlarged investment bank franchise which would still be able to lift earnings over time.
"RHB Capital is currently the cheapest Malaysian bank under our coverage and the next catalyst would be the imminent group restructuring," it added.
HwangDBS Vickers maintained its 'buy' call on the stock, with a lower target price of RM8.80 from RM9.20.
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