BIMB HOLDINGS

Target price: CIMB Research is positive on BIMB Holdings’ new key focus on small and medium enterprise (SME) banking under the leadership of its new group CEO, Khairul Kamarudin.

The research house said it was encouraged that BIMB aimed to expand its market share in the SME banking segment, as it lagged behind other banks in this area.

As at end-June 2017, SME loans only accounted for 2.3% of BIMB’s total loans.

“Hence, growing the share of SME loans would help BIMB to diversify its loan book away from household loans, which accounted for 73.7% of its total loans as at end-June 2017,” it said in a note.

CIMB Research added that loans from the SME banking segment commanded better margins and that there were opportunities to generate fee income from customers.

“For this initiative, it is considering recruiting experienced staff from the SME banking divisions of other banks,” it said.

The research house said it retained its “hold” call on BIMB as it believed that if Permodalan Nasional Bhd (PNB) managed to introduce Islamic shares (i-shares) for Maybank, some of the funds seeking investments in syariah-compliant banking stocks could switch out from BIMB.

At the moment, BIMB is the only listed syariah-compliant bank in Malaysia.

It kept its financial year 2017-2019 earnings per share forecasts unchanged.

On fintech initiatives, the research house said it is positive on BIMB’s collaboration with US-based technology company Cognizant.

“If BIMB adopts any applications developed by Cognizant, it would have to share the revenue generated from the applications with Cognizant.

“We are positive on this as we believe it could increase the competitiveness of BIMB in the digital banking space and generate additional income in the future,” it added.