CGS-CIMB REMAINS 'OVERWEIGHT' ON BANKS, SEES CORE NET PROFIT GROWTH OF 14.8 PCT IN 2023

KUALA LUMPUR, Sept 26 (Bernama) -- CGS-CIMB Securities Sdn Bhd has projected a core net profit (CNP) growth of 14.8 per cent in 2023 and 8.3 per cent in 2024 for Malaysian banks under its coverage.

This was premised on the back of increases of 2 to 4 per cent in net interest income and 7 to 14 per cent in non-interest income.

“We also forecast a 2.8 per cent decline in loan loss provisioning (LLP)  for 2023 but an 11.7 per cent jump in 2024 (as the 2023 forecast LLP is reduced on write-backs in management overlay in the first half 2023.)

“We see the non-recurrence of (prosperity tax) taxation as another earnings catalyst for banks this year,” it said in a note today.

The firm also said that it reaffirmed its “overweight” rating on Malaysian banks “on the potential partial write-back in management overlay and capital management by several banks that could lead to an increase in dividend payout ratios and expansion in return on equity over the longer term.”

It forecast a total core net profit of RM6.5 billion to RM6.6 billion in the third quarter this year (3Q 2023) for the local banks under its coverage, representing growth of 1 to 4 per cent quarter-on-quarter and 7 to 9 per cent year-on-year (y-o-y).

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“This is underpinned by our expectation of a resumption in net interest income growth on stabilised net interest margin and y-o-y loan growth of around 4 per cent in the third quarter.

“We also expect banks’ 3Q 2023 non-interest income to be close to 2Q 2023’s level of RM5.43 billion but with lower y-o-y growth at mid-single-digit rates versus. 2Q23’s 47.2 per cent,” CGS-CIMB said.

Hong Leong Bank, Public Bank, and RHB Bank are among the banks under its coverage.

-- BERNAMA