(CIMB MK/HOLD/RM6.18/Target: RM6.85)

After meeting with management yesterday, our earnings outlook for the group remains generally intact, apart from potentially higher-than-expected provisions in CIMB Thai that will be partially offset by continued improvement in provisions from CIMB Niaga. The improvement in 2018 ROE is much milder than that in 2017 as the recovery in provisions will plateau. Maintain HOLD with a higher Gordon Growthderived target price of RM6.85 (1.20x 2018F P/B, 10.0% ROE) as we roll over valuation to 2018. Entry price: RM5.70.

Source: UOB Kay Hian Research - 20 Oct 2017