CIMB Group Holdings Bhd is said to be hiring Rafe Haneef from HSBC Amanah Malaysia Bhd to lead its Islamic banking unit.
KUALA LUMPUR: AmInvestment Research is maintaining its Buy call on CIMB Group
Holdings, with an unchanged fair value of RM6.60 a share.
The research house said on Wednesday its fair value was based on FY18F return on equity (ROE) of 10.5% leading to a price-to-book value (P/BV) of 1.2 times.
“Post-3QFY17 results, we have fine tuned our net profit forecast for FY17/18/19 by 0.2%/2.0%/3.2% respectively after factoring in higher estimates for Islamic banking income and credit cost,” it said.
It said CIMB’s 3QFY17 core net earnings grew modestly by 2.7% on-quarter to RM1.13bil, underpinned by higher total income and lower provisions for loan impairment.
The 9MFY17 net profit surged 26.0% on-year to RM3.42bil. This was driven by higher non-interest income (NOII) and net interest income (NII) on the back of higher NIM and decent loan growth.
“Cumulative earnings were within expectations, making up 80.0% of our and 76.6% of consensus estimates respectively.
“Gross loan growth continued to moderate to 7.0% on-year compared to 8.3%YoY in the preceding quarter (excluding forex translation impact: 6.4% on-year) after a strong growth in 1QFY17.
This was due to the slowdown of loans across all divisions (consumer, commercial and wholesale banking).
Expansion in loan book continued to be driven largely by Malaysia while loans in Singapore picked up pace. Loan growth in Thailand was flat while that in Indonesia was modest.
“The 3QFY17 NIM declined 11bps on-quarter to 2.60%, due to weaker margins in Indonesia.
“NIM in Malaysia has been holding up. For 9FY17, NIM was still higher by 6bps on-year to 2.67% supported by better liquidity management in Thailand, Indonesia and Singapore.
“The group reported a positive JAW of 5.3%. The CI ratio in 9MFY17 of 52.1%, was close to our estimate of 52.5% for FY17,” it said.
AmInvestment Research said on a quarterly basis, the group's impaired loan balance rose by 8.9% in 3QFY17, contributed by higher impaired loans in Thailand, Singapore and Indonesia.
By segment, the increase came from higher impairment of mortgage, personal loans, loans for purchase of fixed assets and working capital loans. This has resulted in the group's overall GIL ratio rising to 3.5% from 3.2% in the preceding quarter.
The 3QFY17 credit cost improved slightly to 0.73% from 0.78% in 2QFY17, but remained elevated. Credit cost was 0.67% for 9MFY17 (9MFY16: 0.72%), higher than its estimate of 0.60% for FY17.
Group CET1 ratio improved 10bps on-quarter to 12.0% as at the end of 3QFY17. It continued to be on track to meet its FY17 target of more than 11.5%.
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