CIMB down 3.2% despite posting record earnings in FY18

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KUALA LUMPUR (March 1): Shares in CIMB Group Holdings Bhd fell as much as 3.2% in active trade this morning, despite reporting record earnings for the financial year ended Dec 31 (FY18) yesterday.

At 12pm, the stock was trading at RM5.68, down 17 sen or 2.9% with 9.17 million shares traded.

Yesterday, CIMB announced a 24.8% rise in net profit for FY18 to a record high of RM5.58 billion from RM4.48 billion in the previous year, on strong performances from consumer and commercial banking, and lower provisions and costs. This was despite a 1.4% revenue fall to RM17.38 billion from RM17.63 billion.

In a note today, RHB Research Institute analyst Fiona Leong noted that CIMB's loan growth momentum was healthy, but missed the management's targets for return on equity (ROE) and cost-to-income ratio (CIR).

"Although deposits growth was healthy, the CASA (current account savings account) ratio declined to 32.7% (Dec 2017: 35%) partly due to withdrawals by corporates in Malaysia," she said.

Meanwhile, Affin Hwang Investment Bank research analyst Tan Ei Leen anticipates a moderation in business activities in Malaysia for 2019, as business sentiment remains cautious due to the global trade slowdown and geopolitical uncertainties, as well as in Indonesia due to uncertainties prior to the general election in April.

Both Affin Hwang and RHB maintained their hold calls on CIMB with unchanged target prices of RM6.10 and RM6.60, respectively.