Investment Highlights

• We maintain BUY on BIMB Holdings (BIMB) with a revised fair value of RM4.50/share (previously: RM4.60/share) based on lower SOP valuation after factoring in an enlarged share capital. This follows the completion of private placement of shares to raise proceeds for settling outstanding sukuk murabahah and as it moves towards the targeted completion of corporate restructuring in 3Q21. Our FY21 net profit has been lowered by 5.9% after lowering our estimates for fund-based income.

• The group reported a lower core net profit of RM185mil (- 8.8% QoQ) in 2Q21. The softer earnings were due to lower net income from the takaful business with the decline in sales of general and family takaful business QoQ. Also, provisions for loans and finance cost were higher in the quarter.

• 6M21 core earnings came in at RM387mil which declined 11.3% YoY due to lower fund-based income, higher opex (increase in personnel cost and general expenses) and finance cost.

• Cumulative earnings were slightly below our estimate accounting for 44.0% of our projection. Meanwhile, it was within consensus projection accounting for 48.6% of street’s number. The variance to our expectation was largely due to lower-than-expected fund based income.

• Bank Islam (BI), BIMB’s 100% subsidiary’s recorded a lower normalised PBZT of RM475mil for 6M21 after stripping out modification loss in 6M20.

• BI’s gross financing moderated further to 6.4% YoY compared to 9.6% YoY in the preceding quarter (net financing growth: 6.2% YoY). Nevertheless, it remained ahead of the industry’s loan expansion of 3.4% YoY.

• For consumer loans, house and personal financing remained key contributors. Both segments grew 10.0% YoY. Meanwhile, growth in outstanding credit card receivables contracted by 5.1% YoY.

• Growth in customer deposits and investment account slowed down to 6.6% YoY. CASA growth tapered QoQ. Nevertheless, CASA and transactional investment account (CASATIA) mix remained stable at 38.6%.

• 6M21 net income margin (NIM) was stable YoY at 2.41%.

• 6M21 CI ratio was slightly higher at 58.0% due to an increase in opex.

Source: AmInvest Research - 1 Sept 2021