Friday 29 Mar 2024
By
main news image

This article first appeared in The Edge Financial Daily on April 30, 2019

CIMB Group Holdings Bhd
(April 29, RM5.20)
Maintain buy with a target price of RM6.60:
CIMB Group Holdings Bhd held a meeting with sell-side analysts ahead of its closed period for release of the first quarter of financial year 2019 (1QFY19) results on May 29. Key takeaways are management reiterated its guidance for loan growth of 7% for 2019. In Malaysia, 1QFY19’s loan growth was good, supported by drawdowns of corporate loans — similar to that in 4QFY18. The management guided for 6% to 7% loan growth for Malaysia. Lending growth in Indonesia is expected at 5% in 2019, on a pickup in the second half (2H) of FY19.

CIMB expects the policy rate in Malaysia to remain stable in 2019, maintaining management’s guidance for a five-to-10-basis-point (bps) narrowing of net interest margins (NIM). For 1QFY19, we expect NIM to be stable to slightly better. Aside from a recovery in CIMB Niaga’s 1QFY19 NIM, a slowdown in deposit accumulation in Malaysia has eased pressure on funding costs. The management expects margins to compress in the quarters ahead, as loan growth gathers momentum in 2HFY19.

The management is also maintaining its credit cost guidance at 40 to 50bps for FY19, from FY18’s 41 bps. The banking group is not experiencing any pressure across Malaysia and its regional operations. Credit cost is expected to be quite good in 1QFY19, helped by some write-backs and lower provisions at CIMB Niaga. That said, management does not expect sustained recoveries for the quarters ahead. — RHB Research Institute, April 29

      Print
      Text Size
      Share