The  CIMB  Group  announced  that  CIMB  Islamic  Bank's  CEO,  Badlisyah Abdul Ghani (who is also a member of the Board) has resigned,  with his last  day  being  15  August  2015.  Meanwhile,  the  Board  of  CIMB  Islamic Bank has elected Mohd Shafri Shahul Hamid as Person-in-Charge of the Bank  and  has  agreed  for  the  Group  Nomination  and  Remuneration Committee to start the process of identifying the next CEO for the Bank. (Source: Bursa Malaysia).

Comments:  In our view, it was not a surprise that Badlisyah tendered his resignation following an internal inquiry ordered by CIMB Group chairman Datuk Seri Nazir Razak on an analysis which Badlisyah made on the social media. Subsequently Badlisyah has admitted to  making  a technical  error and  his  remarks  were  removed.

Meanwhile,  we  are  of  the  view  that  the appointment of a person-in-charge of CIMB Islamic will continue to ensure that  operations  will  be  on  a  business-as-usual  basis.  We  are  currently reviewing our SELL rating on CIMB, with a Price Target of RM5.50 (at 1.0x P/BV). We note that the Group is expected to see lower credit in 2H15 in the absence of heightened provisions for CIMB Niaga while staff costs are expected to be lower in 2016.

Source: Affin Hwang Capital Research - 15 Jul 2015