Hlib Expects Cimb's Net Interest Margin To Improve In 1q Fy2024

KUALA LUMPUR, March 1 (Bernama) -- Hong Leong Investment Bank Bhd expects CIMB Group Holdings Bhd's net interest margin to improve in the first quarter of 2024 (1Q 2024) on the back of stricter pricing discipline for both loans and deposits.

In a note today, it said net credit cost (NCC) is expected to stay steady at 30 to 40 basis points.

“Besides, we are not overly concerned on any potential asset quality deterioration as we reckon CIMB is better equipped than prior slumps, loan loss coverage (LLC) is now at 97 per cent versus the pre-pandemic level of 75 per cent," it said. 

Yesterday, CIMB Group Holdings Bhd reported a strong performance for the financial year ended Dec 31, 2023 (FY2023) with its net profit jumping 28.3 per cent to RM6.98 billion from RM5.44 billion in the preceding year. 

"All in all, we still believe CIMB’s risk-reward profile is balanced since the share price has done well in recent months and it is not inexpensive. Plus, its foreign shareholding level of 31 per cent is close to its 5-year peak.

"We keep a 'hold' call rating with a higher target price (TP) of RM6.55 per share," said Hong Leong Investment Bank.

Meanwhile, RHB Investment Bank Bhd said CIMB is still a sector top pick, hence the research house increased FY2024-2025 forecast profit after tax and minority interests by 9-10 per cent following the better-than-expected results.

"We raise our TP to RM7.35 per share. Our TP includes an unchanged two per cent environmental, social and governance (ESG) discount, based on CIMB’s 2.9 ESG score," it said. 

At 12.30 pm, CIMB counter eased 11.0 sen to RM6.35 with 26.15 million shares traded on Bursa Malaysia. 

-- BERNAMA