KUALA LUMPUR: Kenanga Research is optimistic about Axiata Group Bhd and RHB Bank Bhd’s joint bid to obtain a digital banking license from Bank Negara, and expects the digital bank to begin operations in 2HFY22.
The research house said the partnership would likely be successful in its offering because Celcom is already serving the underbanked while RHB will benefit the consortium with its expertise and advice, and Axiata already has the framework to operate a digital bank.
In terms of profitability, Kenanga believes the group will focus on growing users and revenues in the first few years, which will lead to the first profit contribution from earlier in fiscal 23.
Assuming that Boost disbursed RM 1,000 micro-loans to one-third of its nine million active users, it would reach a maximum allowable total asset size of RM3 billion during the founding phase of three. at five years.
Based on a hypothetical 3% effective annual interest, this will produce Boost interest income of RM90 million compared to FY21 income of RM25 billion.
“We anticipate that Boost will provide additional financing facilities alongside its e-wallet services.
“As an electronic wallet, Boost has valuable insight into cash flow and customer and merchant behavior, enabling them to offer risk-based pricing and product personalization,” Kenanga said.
He added that Axiata will likely cross-sell its products and offer incentives to boost customer acquisition and retention given its myriad of services.
The research house maintained its “outperformance” on Axiata with a price target of RM 4.20.