Analysts ‘positive’ on CIMB results
Kenanga says better performance driven by Islamic banking income
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.