We retain our NEUTRAL call and GGM-based TP of MYR4.30 (6% upside). Despite the 4% QoQ (flat YoY) drop in net profit (lower nonfinancing income), BIMB’s 2Q15 results met our and consensus expectations. Looking forward, we see income growth, tighter liquidity and asset quality as key challenges banks are facing but BIMB’s liquid balance sheet and high LLC levels should provide a downside cushion.
2Q15 net profit of MYR130m (flat YoY, -4% QoQ) was within our and consensus estimates, with 1H15 net profit of MYR266m (+5% YoY) accounting for 51% of our and 49% of the consensus full-year net profit forecasts.
Results highlights. The QoQ drop in net profit was mainly due to lower non-financing income (-7% QoQ) from both forex and contribution from takaful. Otherwise, financing growth gathered momentum (+3% QoQ vs. 1Q15: +2% QoQ), its net financing margin (NIM) was stable sequentially while credit cost (annualised) was lower at 33bps (1Q15: 40bps). BIMB’s cost-to-income ratio, however, rose 200bps QoQ to 55.7% due to weaker operating income but overall, overheads were generally under control (+2% QoQ). We also note an uptick in gross impaired financing (+2% QoQ). YoY, the rise in pre-impairment profit was offset by higher financing impairment allowances, leaving 2Q net profit flat.
Loan and deposit growth. BIMB’s annualised financing growth was 11% (+18% YoY), driven by financing to SMEs and individuals. Meanwhile, total customer deposits rose by an annualised pace of 11% (+13% YoY, +4% QoQ), but its current account and savings account (CASA) deposits were down 2% QoQ (+4% YoY). Hence, while BIMB’s balance sheet remains liquid with the financing-to-deposit (LD) ratio at 72% (1Q15: 73%; 2Q14: 69%), the CASA ratio declined QoQ to 33.8% (1Q15: 35.9%, 2Q14: 36.6%).
Asset quality. The QoQ uptick in impaired financing was mainly due to the household segment (+15% QoQ, +42% YoY), but overall, the gross impaired financing ratio for this segment was still low, at just 0.8% (system household gross impaired loan ratio: 1.1% at end-June 2015).
Forecasts and investment case. We make no change to our earnings forecasts, MYR4.30 TP and NEUTRAL call. However, our TP is now based on the Gordon Growth Model (previously SOP), which assumes: i) COE of 10.5%, ii) 17% ROE, and iii) 4.5% long-term growth.
Source: RHB Research - 15 Sep 2015
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BIMBCreated by kiasutrader | Jun 14, 2016
Created by kiasutrader | May 05, 2016