Highlights

CIMB Group Holdings Berhad - No Surprises

Date: 30/11/2018

Source  :  PUBLIC BANK
Stock  :  CIMB       Price Target  :  6.50      |      Price Call  :  BUY
        Last Price  :  3.76      |      Upside/Downside  :  +2.74 (72.87%)
 


The Group reported an RM1.18bn net profit (+4.2% YoY, -40.4% QoQ) for 3QFY18, bringing 9MFY18 net profit to RM4.47bn (+30.8% YoY). Cumulative numbers are aided by one-off disposal gains excluding which, the RM3.54bn achieved is in line with our and consensus expectations at 74% of full-year estimates. Growth continued to be underpinned by the consumer banking business, from Malaysia in particular. Operating expenses (-6.4% YoY on business-as usual basis) and loan loss provisions (-30.7% YoY) continue to trend downwards, underscoring scope for earnings upsides particularly if the Group’s regional exposures make more significant turnarounds. We remain optimistic on the Group’s longer-term prospects, pockets of near-term challenges notwithstanding, and affirm our Outperform call with an unchanged target price of RM6.50.

  • Operating income is down 5.6% YoY to RM12.38bn for 9MFY18 due largely to a reduction in non-interest income as capital market activities slowed in Malaysia while weaker net interest income contributions from the wholesale banking (corporate banking, treasury, investment banking) segment also weighed, though there was a slight pickup (+20.0% QoQ) for the latter in 3QFY18. Operating expenses were down a larger 6.4% YoY to maintain its positive JAW position, this coming mainly the deconsolidation of costs (of about RM150m per quarter) from the global stockbroking business post-sale to China Galaxy Securities. Current 51.6% cost-income ratio is within touch of the 50% FY18 target.
  • Loans growth (+4.9% YoY, +7.3% excluding FX translations) was driven predominantly by the consumer banking business (+5.4% YoY) and Malaysia (+11.0% YoY) in particular. While some measure of improvement is beign seen in Thailand, Indonesia will remain decidedly weak in the near term, weighed by macro-based headwinds. The slumping Rupiah has sapped confidence while the forthcoming Presidential Election has stifled activity.
  • Net interest margin (NIM) ticked up QoQ to 2.49% (2QFY18: 2.48%). Barring further adjustments in Indonesia, full-year NIM will likely closer to 10bos as guided by management.
  • Marked reduction in loan loss provision (-30.7% YoY, or RM507m) is still a major factor in bottom-line improvement, driven by the consumer banking (- 53.2% YoY) and commercial banking (-48.6% YoY) businesses. Loan loss charge is 0.47% (2QFY18: 0.41%), gross impaired loans ratio is 3.1% (1QFY18: 3.2%) while allowance coverage ratio is 107.1% (2QFY18: 106.8%) post- MFRS9. These improving trends should be sustained going forward.

Source: PublicInvest Research - 30 Nov 2018

Share this
Labels: CIMB

Related Stocks

Chart Stock Name Last Change Volume 
CIMB 3.76 -0.04 (1.05%) 17,696,100 

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View Trading Signals and run Live Backtest
MQ Affiliate
Earn rewards with MQ Affiliate Program
 
 

454  479  533  468 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 PDZ 0.19-0.015 
 FINTEC 0.10+0.01 
 VC 0.080.00 
 AT 0.095-0.005 
 MQTECH 0.08-0.01 
 DGB 0.050.00 
 MLAB 0.0550.00 
 AIRASIA 0.75+0.045 
 IRIS 0.275-0.015 
 LUSTER 0.135+0.01 

FEATURED POSTS

1. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
2. MQ Affiliate – A smarter way to earn more rewards MQ Trader Affiliate Program
3. MQ Affiliate – How to become an effective affiliate MQ Trader Affiliate Program
4. MQ Affiliate – Upgrading to Affiliate Partner MQ Trader Affiliate Program
Partners & Brokers