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MIDF Sector Research

Author: sectoranalyst   |   Latest post: Fri, 22 Feb 2019, 09:48 AM

 

BIMB - OPEX On The High Side

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  • BIMB PAZTAMI for 1HFY17 was within ours and consensus’ expectations.
  • Moderate income growth that was supported by strong net financing asset growth.
  • However, OPEX was on the high side.
  • Asset quality remained healthy.
  • We retain our FY17 forecast numbers at this juncture.
  • We maintain our NEUTRAL recommendation with an unchanged TP of RM4.90.

As expected. The 1HFY17 earnings for BIMB was within ours and consensus' expectations. It was 46.3% and 46.7% of full year estimates respectively.

Decent growth for Bank Islam. Bank Islam Group recorded PBZT growth of +2.3%yoy to RM367.8m due to growth in business activities. Meanwhile, Takaful Malaysia PBZT grew more robustly at +13.2%yoy to RM113.6m on higher net wakalah fee income.

Moderate income growth... Net income for 1HFY17 grew moderately at +5.7%yoy due to higher distributable income (+7.2%yoy). We believe that the main contributor for the income growth was the strong net financing growth.

...supported by strong net financing asset growth... Net financing asset expanded +11.5%yoy to RM40.5b as at 2QFY17. Correspondingly, fund based income also increased, by +6.1%yoy to RM63.5m. The net financing asset growth came from strong expansion in the housing segment. Financing for housing expanded +17.8%yoy to RM15.1b.

...but income was outpaced by OPEX. Higher OPEX came from increased spending on promotion and general expenses, where it grew +16.5%yoy to RM132.1m and +7.4%yoy to RM98.7m respectively.

Deposits growth supported asset growth. Customer deposits and investment accounts rose +13.4%yoy to RM48.1b. CASA ratio as at 2QFY17 was 31.6%.

Asset quality remained healthy. The Group’s asset quality remained steady as its gross impaired loans ratio stood at 1.02%.

Impact on earnings. We maintain our FY17 estimates as the result was within expectations.

Recommendation. We are maintaining our TP at RM4.90 based on pegging our FY18 BVPS to 1.65x PBV, which is 1 standard deviation below its 5-year historical mean PBV of 1.90x. We maintain our NEUTRAL call for now as we await the analyst briefing tomorrow. We do not rule out a re-rating should we see a strong catalyst for the stock.

Source: MIDF Research - 29 Aug 2017

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