CIMB’s FY18 results roughly in line

KUALA LUMPUR: CIMB Group Holdings Bhd’s (CIMB) results for the full 12 months of 2018 (12M18) have roughly come in line with the research arm of Kenanga Investment Bank Bhd’s (Kenanga Research) expectation, accounting for 94 per cent of its core earnings estimate.

According to Kenanga Research, CIMB’s 12M18 net profit of RM5.58 billion exceeded its expectation, accounting for 117 per cent and118 per cent of its and market estimates due to the RM1.1 billion (disposal of 20 per cent stake in CIMB Principal Asset Management and 10 per cent stake in CMP Islamic Asset Management).

“Stripping of these gains, core net profit is RM4.5 billion, roughly in line with our and market estimates of 94 per cent and 95 per cent,” the research arm said.

The research arm also compared CIMB’s total dividend per share (DPS) or payout ratio of 25sen or 51 per cent payout to its expectations of 24sen and payout ratio of 40 per cent.

In its outlook on CIMB, Kenanga Research’s assumptions were that loans growth will be at approximately 5.5 per cent, credit cost at 45 basis points (bps), net interest margin (NIM) compression of 10bps and return on equity (ROE) of 8.4 per cent.

“Coming from a low base, we pencilled in a 7.5 per cent growth in non-interest income (NOII) but expect a contribution of 26 to to the -line (versus 18: 25 per cent).”

Looking ahead, Kenanga Research lowered its financial year 2019 estimate (FY19E) earnings by 2.4 per cent to RM4.7 billion.

The research arm also introduced FY20E earnings for CIMB, where it expected higher risks. It projected CIMB’s net profit for FY20E to reach RM4.63 billion.