Journey to Wealth
CIMB Group Holdings - CIMB Niaga: An Unexciting 3Q12
Period 3Q12
Actual vs. Expectations
CIMB Niaga reported a 3Q12 PAT of Rp1,118b, up 7% QoQ but it showed signs of loan contraction in certain of its market segments both on a YoY and QoQ comparison.
Dividends None for the quarter.
Key Result Highlights
QoQ, the 3Q12 PAT of Rp1,118b was only up by 7% (vs. 2Q: 12%) with the loan expanded marginally by 1% QoQ to Rp138.9t (14% YoY).
As at the 3Q12, we are seeing an early sign of lending pressure, particularly on the consumer and corporate segments. Consumer loans contracted by 1% QoQ, which was impacted by the new LTV rule that took place on 15 June. Meanwhile, corporate loan shrunk by 5% QoQ due to the repayment of a few accounts as well as a slower macro development in Indonesia.
As such, the net interest income was flat QoQ and stood at Rp2,481b. NIM rose by 36bps YoY but was -3bps QoQ to 5.90% due mainly to strong price competition in both the assets and liabilities.
However, the RM731b in Non Interest Income was up marginally by 3% QoQ.
Opex of Rp1,520.0b was also flat (+0%) QoQ. The advertising and personnel cost added mostly to the higher opex. This led to a stable cost-toincome ratio of 46.99% (+10bps QoQ). Outlook We had turned cautious on the Indonesian banking industry earlier on in our 2Q12 result note. The outlook on loan demand for the auto and property industry remains uncertain due to the implementation of the new LTV rule.
As a result, the earnings visibility would be unclear at least for the next six months. Management has revised down its 2012 loan growth target to 15-16% from 18-20% previously and sees no near term catalyst.
Change to Forecasts
Maintaining our FY12-13E PAT of RM4,030.8m- RM4,394.7m for CIMB.
Rating OUTPERFORM
Our OUTPERFORM rating on CIMB is maintained as th current share price still offers a 9% upside potential to our TP of RM8.20.
Valuation Maintaining our target price of RM8.20 being 2.0x FY13 PBV (which is at a -1SD level or 10% discount to its 3-year PBV average of 2.2x), which also implies a 12.7x FY13 PER.
Risks Tighter lending rules and margin squeeze.
Source: Kenanga
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