CIMB seems to be on track with loans growth target — Analysts
KUCHING: CIMB Group Holdings Bhd (CIMB) seems to be on track with the group’s loans growth target, the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) analysts observe, following a meeting with the group’s chief financial officer (CFO) recently for an update of the latest development.
According to MIDF Research, at current juncture, the group is comfortable with the loans growth run rate.
“This is especially the case in Malaysia, where management believes it will be able to achieve the six to seven per cent loans growth target,” the research arm said.
MIDF Research echoed this view given the demand for affordable housing. The research arm also noted that the loans growth are skewing towards mortgages.
“The challenge will be in Indonesia and Thailand with a decline in its auto loans book and small and medium enterprise ( SME) loans respectively.
“Nevertheless, we understand that retail loans in these two markets appear to be stable.”
MIDF Research was pleased that the management indicated that CIMB competes for loan acquisitions through the group’s service offering and not through pricing.
It pointed out that this include easier loans application and faster turnaround in approval.
“An example is the recently lauched ‘instant mortgage’ where the group offers 1-Minute Home Financing InstaApproval scheme in Malaysia.”
MIDF Research believed that this will ensure any pressure on net interest margin ( NIM) will be moderate.
The research arm also believed that corporate loans will likely drive loans growth.
“Recall, in our previous meeting, the management indicated that corporate loans is expected to lead the loans growth in financial year 2018 ( FY18), with the loans pipeline looking healthy.
“Conversely, retail loans growth rate in FY18 is expected to be at similar level or slightly less than the growth registered in FY17.”
However, the research arm did not discount the possibility of mortgages in Malaysia to continue to grow robustly given continuing demand for affordable residential property.