BIMB’s 1H16 core earnings of RM279m (+5.0% YoY) was within expectations, accounting for 47%/49% of our/consensus estimates. The improvement in earnings was due to higher-thanexpected financing growth with upticks in Net Financing Margin. Surprisingly, no dividends were announced for the quarter. We expect BIMB to be resilient going forward; thus, a slight revision upwards in our forecast earnings. TP is revised to RM4.25 (from RM4.18 previously) but MARKET PERFORM call is maintained.
1H16 core earnings improved as both income from investment of depositors and shareholders’ funds registered double-digit growth for the period. In the banking business, gross financing was robust (+17% YoY) coupled with improved Net Financing Margin (NFM) and cost of credit flattish. Improvements can also be seen on QoQ basis with net income improving (after falling in the preceding quarter) due to lower credit cost despite asset quality was weaker QoQ as per gross impaired financing ratio (GIF)... (but improved YoY falling 13bps to 1.05%).
Islamic Banking Business
Takaful business
Source: Kenanga Research - 29 Aug 2016
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