KUALA LUMPUR (Aug 3): The second quarter (2QFY17) for CIMB Group Holdings Bhd is expected to have been quiet, having been a slower quarter for wholesale and corporate banking, according to banking sector analysts.

In a report today, AmInvestment Bank Research said execution of investment banking (IB) deals and corporate banking loans were slower in the quarter; although for the start of 3QFY17, the momentum for IB and banking loans has picked up.

"This is seen positive on the group's fee income. It has a decent pipeline of corporate loans. Meanwhile, performance of its retail banking in Malaysia has been steady," said AmInvestment Research. The research house maintains "hold" on CIMB with an unchanged fair value of RM6.70.

RHB Research also concurs on the CIMB's expected slower quarter, citing to not expect any major positive surprises for the coming 2QFY17 results, scheduled to be released on Aug 28.

"Topline growth is expected to moderate as business activities slowed during the Ramadan month. With disciplined cost growth, we expect the bank to achieve positive jaws. Higher impairment charges in 2Q17 would filter down to a net profit of c.MYR1,000m for 2Q17 (-15% QoQ) and MYR2,180m for 1H17 (+29% YoY)," said RHB Research.

RHB Research remains positive on the stock, however, maintaining "buy", with a target price of RM7.10.

"We believe CIMB's share price would continue to outperform peers as the stock remains a good proxy to the country's gradual economic recovery," it said.

On loan growth in Malaysia, though challenging, management had hinted that for full FY17, a loan growth of 7% year-on-year is achievable.

"Loan growth in Malaysia is tracking well with healthy demand for housing loans and a pick-up in corporate lending. Prospects in Indonesia, however, are clouded by the slower-than-expected rebound in economic activities. In Thailand, management is not pushing for loan growth," said RHB research.

On net interest margins (NIM), CIMB Niaga's strong NIM in 1HFY17 due to higher CASA ratio and active management of liabilities shows there is a potential for the group's NIM to turn out better than its guided compression of 5 to 10 basis points," said AmInvestment Research.

"Domestically, we gather that certain banks are running deposit campaigns with a few preparing for the implementation for net stable funding ratio (NSFR) in 2018," it said.

"With milder NIM compression compensating for a potential shortfall in loan growth, we are maintaining our forecast net profit of RM4,451 million (core: +30% YoY). This means the bank is on track to achieving its ROE target of 9.5%," said RHB Research.