WHATS NEW

BIMB Holdings (BIMB) announced that Chief Executive Officer, Encik Khairul Kamarudin, has resigned with immediate effect. He has also relinquished his position as Chief Executive Officer of Bank Islam Malaysia, a wholly-owned subsidiary of BIMB. The Board has appointed Encik Mohd Muazzam Mohamed as Acting Chief Executive Officer, effective 20 Jul 18. Encik Mohd Muazzam joined the Bank on 11 May 2015 as Chief Financial Officer.

COMMENTS

• A loss to the group but transition should be relatively smooth. Encik Khairul Kamaruddin may have been the CEO of BIMB and Bank Islam for just under a year but he had been with the group since 2005 and was instrumental in revamping the group’s risk management system that resulted in a turnaround in operations on the back of lower NPLs. Despite his resignation, we think the overall financial performance should be largely unaffected, driven by the group’s key subsidiary, Syarikat Takaful Bhd which has its own management team. We also think that the possibility of major corporate exercises, such as a group restructuring that could involve the collapse of its holding company structure and a rights issue to raise money to repay its RM1.2b sukuk, are largely driven by decision making at the board level. Overall business operations will remain largely intact with the group’s CFO being elevated to his current role as acting CEO until a permanent replacement is found.

• Maintain BUY. BIMB should also be a beneficiary of stronger consumer purchasing power as 70% of its loan portfolio is skewed towards consumer loans. 1QFY18 net profit was above our estimate due to broad-based revenue growth from net interest income to fee income. As such, revenue growth was commendable, expanding 5.3% qoq and 9.0% yoy. Maintain BUY and target price of RM4.85 (13.2% FY18F ROE, 1.64x FY18F P/B). The stock is trading at an attractive 1.33x FY18F P/B vs 13.2% ROE.

Source: UOB Kay Hian Research - 23 Jul 2018