KENANGA RESEARCH MAINTAINS 'MARKET PERFORM' ON CIMB, TP RM4.40

KUALA LUMPUR, Aug 2 -- Kenanga Research has maintained a 'market perform' rating on CIMB Group Holdings Bhd (CIMB) with a target price (TP) of RM4.40.

The research firm said this was supported by CIMB's 92.5-per cent-owned subsidiary, CIMB Niaga in Indonesia, which reported a solid and higher-than-expected earnings in the  first half (1H) of its financial year (FY) 2021. 

It said CIMB Niaga's net interest margins (NIMs) for the said period remained supportive with non-interest income (NOII) assets yielding better results.

Typically, CIMB Niaga makes up 15-20 per cent of CIMB's profit before tax (PBT). 

"The management (CIMB) is cautiously optimistic as asset quality remains an ongoing concern, but sees growth opportunities from enhanced digital capabilities. 

"We are keeping our group-level estimates (for CIMB) unchanged for now, pending group-level earnings report to be released at end-August 2021," it said in a research note today. 

Kenanga Research said having laid the foundations for its digital strategies, CIMB Niaga’s management hoped to further tap into underbanked consumers with open banking solutions to widen its product range. 

The digital channels could also support the bank in keeping the Current Account Savings Accounts (CASA) growth sustainable. 

As the vaccination rate in Indonesia progressively increases, the gradual ensuing economic recovery could spill into the following quarters. 

It noted that risks on the call include higher/lower-than-expected margin; higher/lower-than-expected loans growth; better/worse-than-expected movement in asset quality; stronger/weaker capital market activities; favourable/unfavourable currency fluctuations, and changes in the Overnight Policy Rate. 

At 11.20 am, CIMB's share price was flat at RM4.45 with 2.26 million shares changing hands.

-- BERNAMA