KUALA LUMPUR (March 1): CIMB Group Holdings Bhd fell by 34 sen or 5.95% to RM5.37 during the morning trading session on Bursa Malaysia on Tuesday (March 1).
The counter opened at RM5.71 and slipped after the opening bell as investors digested a RM281 million credit loss provision for the financial year ending Dec 31, 2022 (FY22). A total of 39.18 million shares were traded as at the noon break.
At RM5.37, the banking group has a market capitalisation of RM55.4 billion based on 10.22 billion outstanding shares. It currently trades at 12.64 times historic earnings and 0.91 times its book value, based on Bloomberg data. Year-to-date, the banking counter has declined by 12 sen or 2.19% from RM5.50.
The second largest bank by asset size in Malaysia had released its fourth quarter ended Dec 31, 2021 (4QFY21) results on Monday with topline revenue declining marginally by 1.68% to RM4.59 billion from RM4.67 billion a year ago while net profit leapt by almost fourfold to RM854.51 million from RM214.98 million, owing to significantly lower provisions.
The bank had also proposed a second interim dividend of 12.55 sen per share, which took its total proposed annual dividend for FY21 to 22.99 sen per share.
Despite the strong quarterly performance, CIMB had provisioned an expected credit loss of RM280.9 million for a double crediting error which affected 11,800 of its customers. The bank said it does not expect the projected credit loss to have a material impact on its FY22 targets.
In a client note, RHB Research analysts Fiona Leong and Eddy Do Wey Qing said that CIMB remains a “buy” with an upgraded price target of RM6.40 from RM6.30.
The analysts wrote that CIMB has made good progress last year in reshaping its loans portfolio and cost efficiency drive.
“The bank is now ready for stronger loan growth in FY22 while the structured cost take-outs have also led to a sustainable cost-to-income ratio reduction. Management remains vigilant on asset quality despite a loan book clean-up. Valuation is compelling at 0.9x P/BV despite the 32% rise in share price over the past 12 months,” the research note read.