KEY INVESTMENT HIGHLIGHTS

• 6MFY24's Core NP of RM3,897m was Within/Within our/street forecasts: 52%/51% of full-year forecasts
• Management's tone: Optimistic
• Core themes: (a) Special dividends, (b) Stronger loan growth in 2HFY24, (c) Optimism on MY COF
• Forecasts unchanged
• Maintain BUY | Revised TP of RM9.11 | based on a revised FY25F P/BV of 1.29x (formerly 1.15x)

Verdict: Solid dividend yields. Even after the recent hike in share price, CIMB's status as a foreign investor favourite implies further room for rerating.

Yays

1. Excellent growth potential from regional exposure.
2. Healthy dividend yields.
3. Healthy NOII contributions expected.

Nays

1. Thailand yet to stage a convincing turnaround.
2. Niaga may still see some NIM-related weakness.

OKs

1. Special dividends in 2HFY24 unlikely.
2. Limited room for further ROE optimisation. 3. Overseas rate cuts could go either way, as cut may not be a 100% pass through. We will keep a close eye on how overseas segments manage rate cuts.

Results in a nutshell:

▲ 6MFY24's Core net profit (NP) of RM3,897m up by +14%yoy. Improved provisions, and NII and NOII results offset steep cost growth.

► 2QFY24's Core NP of RM1,961m up by +1%qoq. Stronger NII and lower provisions offset the normalisation of NOII balances.

► Gross loans grew by +0.6%qoq, coming up to +0.9%YTD.

▼ Deposits grew by -1.8%qoq, coming up to -0.4%YTD.

▲ GIL moved by -6bps to 2.50%, LLC currently at 101%.

Have a look at:

▲ Special dividend cheer. As guided previously, CIMB issued a special dividend of 7 sen (19% payout) in addition to its basic interim dividend of 20 sen (55% payout). Management is happy with current CET1 levels and is unlikely to issue another special dividend payout anytime soon.

▲ Better loan growth in 2HFY24. YTD loan growth has been +0.9% so far, far from FY24's 5-7% target. It was dragged by the wholesale segment, with the Group still prioritising NIMs over market share (A stance it will continue to uphold). Regardless, management is confident in achieving the figure. Targets given are MY: +5%yoy, IND: +5-7%yoy.

Source: MIDF Research - 2 Sep 2024