BIMB’s 9M18 net profit of RM520m (+10% YoY) came in line with our and consensus full year forecast, representing 80% and 81% respectively, assisted by stronger results from Bank Islam and Takaful segment amid the higher opex. Loan growth climbed to 10.4% YoY (6.7% in 6M18 as all segments registered positive loan growth, including consumer (+9.9% YoY) commercial (+10.3% YoY) and corporate (+16.6% YoY). STMB’s 9M18 net profit advanced by 35.5% YoY to RM202m, underpinned by higher wakalah fee income from both Family and General takaful segments. Maintain BUY with TP of RM4.90 derived from (i) COE of 13.6% and (ii) WACC of 8.2%.
Results in line. BIMB delivered decent results in 3Q18 with net profit of RM197m (+8% YoY, +32% QoQ) lifting 9M18 net profit to RM520m (+10% YoY). The results came in within expectations, representing 80% and 81% of our and consensus full year forecasts . Stronger net profit in 9M18 was assisted by stronger results from Bank Islam and Takaful segment amid the surge in opex.
Dividend. BIMB announced first interim dividend of 15.5 sen (14 sen in 9M17), representing 50% payout, ex-date will be determined on a later date.
QoQ. Despite higher financing charge of RM26m (+77%), net profit strengthened to RM197m (+32%) aided by higher operating income of RM749m (+13%) linked with both Bank Islam (+11.3%) and Takaful segment (33.3%).
YoY. The 22% increase in total operating income was aided by stronger Bank Islam and Takaful segments, but partly offset by higher opex 9.9% stemming from higher personnel and promotion expenses.
Loan growth. Loan growth climbed to 10.4% YoY (vs. 6.7% in 2Q18) as all segments registered positive loan growth, including consumer (+9.9% YoY) commercial (+10.3% YoY) and no signs of slow down in corporate (+16.6% YoY). On the funding end, customer deposits moderated by -1.1% YoY stemming from lower CASA and investment account accumulation by -1.8% YoY. NIM was flattish at 2.65% as BIMB defended NIM through asset and liability management. On the flip side, gross impaired financing weakened to 0.97% from 0.93% in 2Q18
Takaful. STMB’s 9M18 net profit advanced by 35.5% YoY to RM202m, underpinned by higher wakalah fee income from both Family and General takaful segments. Within Family takaful segment, gross earned contribution grew 17.2%, attributable to higher sales from credit-related products. For General takaful segment, gross earned surged by 25.8% YoY to RM519.7m mainly from fire and motor premiums.
Forecast. No Change to Our Forecast
Maintain BUY, TP: RM4.90. Maintain BUY recommendation with unchanged TP of RM4.90 based on GGM valuation of (i) COE of 13.6% (ii) WACC of 8.2%. Bank Islam’s financing growth has consistently outpaced system loan growth (given its exposure in the retail segment, in particular, government staff, which have superior asset quality) while STMB’s earnings are still at growth stage with its lion share in the Family and General Takaful segment.
Source: Hong Leong Investment Bank Research - 29 Nov 2018
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