An­a­lysts ‘pos­i­tive’ on CIMB re­sults

Ke­nanga says bet­ter per­for­mance driven by Is­lamic bank­ing in­come

The Star Malaysia - StarBiz - - News - By GANESHWARAN KANA ganeshwaran@thes­tar.com.my

PE­TAL­ING JAYA: An­a­lysts are gen­er­ally pos­i­tive on CIMB Group Hold­ings Bhd’s fi­nan­cial re­sults for the first nine months ended Sept 30, which was up mainly as a re­sult of stronger op­er­at­ing in­come.

Ac­cord­ing to Ke­nanga Re­search, CIMB Group’s fi­nan­cial per­for­mance in the first nine months ended Sept 30 has trumped its ex­pec­ta­tions, with the core net profit of RM3.41bil ac­count­ing for 84% of its full-year es­ti­mate.

Sim­i­larly, the group’s core net profit in the first nine months ended Sept 30 was also above con­sen­sus’ pro­jec­tion.

“The bet­ter-than-ex­pected per­for­mance was driven by CIMB Group’s Is­lamic bank­ing in­come which grew by 19% year-on-year (y-o-y) as com­pared to our ex­pec­ta­tions of slight dip of 2%. The rest such as loans and credit costs growth were within our ex­pec­ta­tion.

“Over­all the group is on track as guided for the fi­nan­cial year of 2017 (FY17).

“We are en­cour­aged by the strong loans growth and op­ti­mistic on the group achiev­ing its tar­get on the back of sus­tain­able cap­i­tal mar­ket ac­tiv­i­ties, bet­ter than ex­pected Is­lamic bank­ing in­come and res­o­lute loans with the ab­sence of high pro­vi­sions seen in FY16,” said Ke­nanga Re­search in a note.

CIMB Group, which is the par­ent com­pany of CIMB Bank Bhd, is an­tic­i­pated to record a flat­tish net in­ter­est mar­gin (NIM) mov­ing for­ward, pri­mar­ily at­trib­uted to soft de­posit-tak­ing as credit de­mand re­mains weak.

Ke­nanga Re­search has re­it­er­ated its “out­per­form” call on the stock, with a lower tar­get price of RM6.75.

The re­search house has also re­vised its earn­ings fore­cast of FY17 and FY18 up­ward by 6% and 2% re­spec­tively, in line with the ex­pected im­prove­ment in CIMB Group’s Is­lamic bank­ing busi­ness.

Mean­while, RHB Re­search de­scribed CIMB Group as its top pick among Malaysian banks, given its per­for­mance year-to­date.

Ac­cord­ing to the re­search house, the group’s first nine months ended Sept 30 re­sults were within its pro­jec­tion.

Af­fin Hwang Cap­i­tal Re­search said that CIMB Group’s first nine months ended Sept 30 head­line net profit was in line with its ex­pec­ta­tions.

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