CIMB Group Holdings Bhd may extend its lead after surpassing Malayan Banking Bhd as Malaysia's biggest lender by value this week as analysts are expected to upgrade the stock after its earnings, OSK Research Sdn Bhd said.

CIMB's second-quarter results after the close today will probably outpace analyst estimates for the third consecutive quarter, bolstered by its Indonesian unit, PT Bank CIMB Niaga, said Keith Wee, an analyst at OSK Research.

'Indonesia has played a crucial role in the re-rating of CIMB's valuations,' Wee, who has a 'buy' recommendation on the stock, said in an interview today. 'CIMB's regional growth traction, especially in Indonesia has been promising.'

Shares of state-controlled CIMB have surged 22 per cent this year as Chief Executive Officer Nazir Razak expanded the bank beyond Malaysia. The gain was twice the benchmark FTSE Bursa Malaysia KLCI Index's 9.9 per cent advance, and outpaced Malayan Banking or Maybank's 19 per cent climb. CIMB's market value reached RM58.1 billion (US$18.5 billion) on August 23, exceeding Maybank for the first time since March 2009.

Wee raised his share price forecast for CIMB three times this year starting on May 7, according to data compiled by Bloomberg. The stock climbed more than 10 per cent during that time, compared with the 4.9 per cent gain in the Malaysian stock index and 7.3 per cent advance in Maybank's shares.

Indonesian, Thai Investments

Kuala Lumpur-based CIMB invested in Indonesia in 2002 and owns CIMB Thai Bank Pcl It's also benefitting from a rebound in Malaysia, where gross domestic product grew 8.9 per cent in the second quarter, near the fastest pace in a decade.

Maybank said last week its full-year net income jumped more than fivefold to a record RM3.82 billion. The lender is still the biggest by assets in Malaysia.

First-half net income at PT Bank CIMB Niaga, CIMB's Indonesian unit, jumped 63 per cent to 1.14 trillion rupiah (US$127 million), according to a company statement published in Bisnis Indonesia on August 23. The earnings 'beat expectations,' Citigroup Inc analyst Fiona Leong said in a report this week, adding it had 'solid revenue growth and good cost control.'

In Indonesia, President Susilo Bambang Yudhoyono this month predicted economic growth will accelerate to 6.3 per cent in 2011, from an estimated 6 percent expansion this year and 4.5 per cent in 2009. 'Indonesia is a huge market and is still a very under-banked market,' said Wee. 'If you're bullish on the economy and future growth prospects, banks will be a good proxy.' -- Bloomberg