FBM KLCI gets firm push from banking stocks

FBM KLCI gets firm push from banking stocks
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KUALA LUMPUR (Dec 12): The FBM KLCI is looking set to reverse the losses the benchmark index suffered yesterday, mainly lifted by gains at banking counters like CIMB Group Bhd, Hong Leong Bank Bhd and Public Bank Bhd.

At 3.04pm, the FBM KLCI was up 12.57 points or 0.76% to 1,665.20 points. Yesterday, the index lost 10.68 points or 0.64% to end the trading day at 1,652.63 points.

So far today, 1.42 billion shares valued at RM1.08 billion have been traded. There were 291 gainers, 302 losers and 424 counters unchanged.

At the time of writing, CIMB was up 24 sen or 4.36% at RM5.75, ranking it sixth in the top gainers list. Hong Leong Bank, which gained 30 sen or 1.49% to RM20.40, and Public Bank, which was up 46 sen or 1.88% at RM24.96, were also among the top gainers on the local bourse today.

In a note yesterday, Maybank IB Research said CIMB's valuations were undemanding after having declined 14% year to date in share price.

"While regional loan growth has been cautious, CIMB's domestic loan growth has been stronger than the industry's, averaging a robust 11% year-on-year (at) end-Sept 2018, which was almost double the industry's pace of 5.7%. Moreover, the recent raising of its Base Rate by 10bps should help to stabilise, if not improve, NIMs (net interest margins) moving forward," said Maybank IB Research, which keeping its "buy" call on the CIMB with the unchanged target price of RM6.70.

The research house is projecting a faster earnings growth of 11% for CIMB in FY19, on the back of more stable NIMs and credit costs, leading to a recovery in return on average equity (ROAE) to 10% from 9.4% (excluding one-offs) in FY18.

"Moreover, we estimate its dividend yield to be 5.5% in FY19, based on a payout ratio of 55% — this compares against a payout of 50% in FY17 and the group's stated dividend policy of 40-60%," the research house noted.