CIMB does well in 1HFY17 on the back of stellar performance
KUCHING: CIMB Group Holdings Bhd’s (CIMB) first hal f of financial year 2017 (1HFY17) results have either met or surpassed analysts’ expectations, on the back of a stellar top-line performance.
According to CIMB in a press release, the group’s profit before tax ( PBT) was 31.8 per cent higher at RM3.05 billion, with loan provisions staying relat ively f lat at 0.3 per cent year on year (y- oy).
CIMB’s first half of 2017 (1H17) core net profit of RM2.283 billion was in line with the research arm of Kenanga Investment Bank Bhd ( Kenanga Research) and consensus expectations accounting for 56 per cent and 51 per cent of estimates, respectively.
On the other hand, the group’s 1HFY17 net profit of RM2.28 billion was slightly above the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) expectations at 56.4 per cent of its full year estimate but within consensus’ at 50.7 per cent.
“The variance was due to our underestimation of its Islamic Banking income where it came in 61.9 per cent of our forecast,” MIDF Research said.
Overall, Kenanga Research was encouraged by the strong loans growth (exceeding target with domestic loans growing stronger than industry) and optimistic on CIMB achieving the group’s target on the back of sustainable capital market activities and resolute loans and the absence of high provisions seen in FY16.
As such, no change was made to Kenanga Research’s FY17 forecasts as the research arm rendered ex i s t i ng assumptions to be conservative at present.
Meanwhile, MIDF Research tweaked its FY17 forecast by 4.7 per cent upwards to reflect the better than expected income from Islamic Banking.
MIDF Research continued to like CIMB for the group’s achievements in growing its income especially net interest income ( NI I ), which was underpinned by its ability to improve net interest margin ( NIM) and grow its loans book strongly.
The research arm also liked the fact that expansion in CIMB’s current and savings accounts (CASA) franchise continue to be robust.
“However, we are slightly concerned on asset quality in Indonesia and Thailand but we understand the situation is gradually improving,” the research arm said.
“Nevertheless, despite our optimism on the Group’s fundamentals, the share pr i c e have appr e c iat ed by 39.2 per cent since our upgrade to ‘ buy’ in April 21, 2016.”
As such, with limited upside cur rent ly, MIDF Research maintained its ‘neutral’ call on CIMB with an unchanged target price of RM7.10 per share.
KenangaResearch’stargetprice of RM6.90 per share and ‘market perform’ was also maintained as the research arm kept a moderate outlook in 2H17.
“While issues on asset quality are receding, other challenging headwinds such as moderate loans growth and downside pressure on NIMs still prevail,” it said.