- At our recent company visit, CIMB Group Holdings (CIMB) indicated that the overall credit growth target is still 14% to 15%, with the loans growth target at 12%. Domestic corporate loans growth is likely to be in the teens. Consumer loans growth is within the single-digit range with the primary focus on unit trust financing, SME and credit card.

- Net interest margin for Malaysia is expected to be flat, while there has been an improvement in the Singapore and Thailand markets. However, Indonesia’s NIM is expected to continue to be under pressure given the tighter liquidity there. To recap, the group has a targeted NIM compression of -10 to -15bps YoY for FY13F.

- The debt capital market pipeline is flattish, with bond demand not as strong as last year. For the recently-acquired RBS division, we believe that revenue is slower as the Taiwan, Korea and India offices came on board fully only from May 2013. We now believe that revenue from RBS is unlikely to cover the normalised operating costs of RM300mil to RM400mil per annum.

- In terms of the wholesale treasury and markets division, we expect some losses from its securities portfolio due to recent movements in yields. However, the company indicated that these are likely to be made up by better forex gains. Overall, the wholesale division is expected to chalk up normalised profit in the upcoming quarters.

- The company believes that the Malaysia, Thailand and Singapore economies are in strong shock-absorbent positions. The most vulnerable may be Indonesia, with its consumer non-performing loans likely to experience an uptick given the removal of fuel subsidies and increase in interest rates. We expect the company to maintain its targeted credit cost of less than 40bps for FY13F.

- Recall that the company’s 1Q was boosted by a RM515mil gain from the sale of its insurance units, offset by RM200mil restructuring charges. A more normalised net earnings level is likely to be at circa RM1bil per quarter without the one-off items. From the company visit, we now expect non-interest income to moderate given slower bond demand, losses on its securities portfolio as well as slower revenue from RBS. Maintain HOLD.

Source: AmeSecurities