RESEARCH FIRMS POSITIVE ON CIMB GROUP AHEAD OF 1Q RESULTS

KUALA LUMPUR, May 7 (Bernama) -- Research firms have maintained their positive call on CIMB Group Holdings Bhd ahead of its first quarter financial year 2024 (1Q FY2024) results to be released on May 31.

In a research note, Maybank Investment Bank (Maybank IB) said the undertones for 1Q FY2024 are generally positive, with net interest margins (NIMs) improving slightly quarter-on-quarter (q-o-q) and non-interest income holding up.

"At this stage, our FY2024 return on equity (ROE) forecast of 10.5 per cent is trailing management’s target of 11-11.5 per cent. There is room for earnings upside surprises, should it hit those targets," it said. 

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However, any economic slowdown in the country would have a knock-on effect on CIMB Group’s operating performance, it opined. 

In addition, with regional exposures in key markets such as Indonesia, Thailand, and Singapore, economic volatility in the region would have a bearing on overall operations. 

Maybank IB said there is no change to its earnings forecasts and maintained a "buy" call on the counter with a target price (TP) of RM7.40. 

Another firm, Hong Leong Investment Bank Research (HLIB Research) said the CIMB Group is likely to see slight NIM expansion, respectable loan growth, still elevated non-interest income, and stable net credit cost (NCC). 

"However, we continue to believe CIMB’s risk-reward profile is balanced since the share price has done well in recent months and it is not inexpensive. 

"Besides, its foreign shareholding level of 32 per cent is now at its five-year peak. In turn, this should cap share price upside going forward," said HLIB Research, adding that it has a "hold" recommendation with a higher TP of RM6.80. 

Meanwhile, MIDF Research has revised their forecasts for FY2024/2025/2026F earnings by +0.5 per cent/+2.0 per cent/+1.0 per cent, respectively. It maintains a "buy" call with a TP of RM7.17. 

It said CIMB Group's dividend yields are strong, with the possibility of special dividend recurrence as CIMB Niaga and Singapore provide excellent regional exposure, with digital initiatives coming to fruition.

"Loan growth outlook is more mixed. CIMB retains its FY2024 loan growth target of 5.0 per cent to 7.0 per cent, with Malaysia's targeted growth at 5.0 per cent. 

"On the possibility of potential upside surprises, the management was pessimistic, prioritising NIM over loan growth," it said. 

MIDF Research also noted that CIMB is willing to lower market share in corporate and business banking loan segments but less willing to lower exposure to consumer and small and medium enterprises (SME) segments, as a loss in franchising and presence in those segments is harder to recover.

On a mortgage segment, MIDF Research said the segment would be under scrutiny, especially if the costs outweigh cross-selling potential. 

"The group has already increased mortgage yields by +20 basis points over the last 12 months, losing 5.0 per cent to 10.0 per cent of acceptance level," it said.

In terms of current account savings accounts (CASA), the bank is optimistic about its CASA outlook with Malaysia, Indonesia, and Thailand seeing good traction while Singapore is losing out to term deposits. 

-- BERNAMA