Maybank Research said CIMB’s 3Q24 results will show NIM to have picked up sequentially for the third consecutive quarter.
PETALING JAYA: CIMB Group
Holdings Bhd’s earnings for the third quarter ended Sept 30, 2024 (3Q24) are likely to be decent amid marginal sequential net interest margin (NIM) improvement despite softer loan growth and robust non-interest income (NOII).
According to Maybank Investment Bank Research (Maybank Research), CIMB’s 3Q24 results, which are expected to be announced on Nov 28, will show NIM to have picked up sequentially for the third consecutive quarter.
However, the research house believes it will be more challenging to sustain such margins in 4Q24, given the expected seasonal pick-up in deposit competition.
Maybank Research noted the credit cost environment remained benign and weaker currencies have had a manageable impact on regional contributions.
“We maintain our forecasts and our financial year 2024 (FY24) return on equity (ROE) of 11.1% is at the lower end of management’s 11% to 11.5% target,” it said.
The research house maintained a “buy” call on the bank with an unchanged target price of RM9.20 a share.
Similarly, Hong Leong Investment Bank (HLIB) Research expects resilient reporting ahead, whereby the broad 3Q24 operational trends are up to expectations.
The research house kept its FY24-FY26 forecasts for CIMB, anticipating to see steady NIM, robust NOII and higher net credit cost in CIMB’s upcoming quarterly results.
It pointed out that the bank’s NIM in 3Q24 was well supported sequentially (2Q24: up four basis points quarter-on-quarter), given lower funding cost from downward repricing of retail deposits and strict wholesale pricing at Malaysia and Singapore.
The research house added CIMB saw a broadly stable NIM in Thailand, but these are bounded by Indonesia’s NIM contraction as it was hit by lower loan yield and higher deposit cost. It highlighted rivalry for deposits heated up in October but was nowhere as intense compared to the level experienced back in 4Q22 and 1Q23.
“Overall, we still think CIMB’s risk-reward profile is balanced. In the short term, we remain a tad concerned on whether its big NOII can be sustained, especially when its fair value through other comprehensive income reserve is still negative,” it said.
HLIB Research retained a “hold” call on CIMB with a target price of RM8.40 a share, with the valuation based on 1.2 times FY25 price-to-book ratio.
