KEY INVESTMENT HIGHLIGHTS

• 9MFY24's Core NP of RM5,928m was Within/Within our/street forecasts: 79%/78% of full-year forecasts
• Core themes: (a) Strong NOII growth, (b) Gross loans impacted by strengthen Ringgit in 3QFY24, (c) Positive JAWS
• Forecasts unchanged
• Maintain BUY | Unchanged TP of RM9.11 | based on an unchanged FY25F P/BV of 1.29x

Results in a nutshell:

▲ 9MFY24's Core net profit (NP) of RM5,928m up by +13%yoy.

Main drivers were strong net income growth (+8.5%yoy), positive JAWS and lower loan provisions (-16.5%yoy).

▲ 3QFY24's Core NP of RM2,030m up by +4%qoq. Contributed by NOII growth (+4.0%qoq) and lower loan provisions (-20.9%qoq).

▼ Gross loans grew by -1.8%qoq, coming up to -0.9%YTD. We opine that this was due to the strengthening of the Ringgit. On a year- on-year basis, loans grew +1.2%yoy and on constant currency basis it grew +4.3%yoy.

▼ Deposits grew by -4.5%qoq, coming up to -4.8%YTD. While total deposits contracted, total CASA expanded by +4.5%yoy. This resulted in increasing the CASA ratio to 42.0% at the end of Sep'24.

▲GIL moved by -16bps to 2.34%, LLC currently at 103%.

Have a look at:

▲ Robust NII growth driven by asset growth. NII (inclusive of Islamic banking) grew +6.0%yoy to RM11.58b in 9MFY24. This was despite NIM compression of -4bps yoy with all markets saw lower NIMs, except MY and SG. Main driver for the higher NII was gross loans growth on year-on-year basis.

▲MY NIM improved +4bps yoy to 1.78%, ▲SG NIM improved +1bps yoy to 1.41%. ▼ IND NIM compressed -36bps yoy to 4.16%, ▼TH NIM compressed -37bps yoy to 2.27%.

▲ Gross loans saw year-on-year growth. All markets saw loans growth on local currency basis; MY (+4.0%yoy), TH (+1.1%yoy), IND (+6.4%yoy), SG (+3.5%yoy) and Others (+11.8%yoy). In terms of segments, consumer and commercial loans also saw better loans growth.

▲ Consumer gross loans grew +3.3%yoy to RM232.0b from all core markets except Singapore. MY consumer loan growth remains robust at +5.5%yoy led by mortgages (+7.3%yoy), auto (+7.8%yoy) and credit cards (+7.8%yoy). Meanwhile TH and IND consumer loans both grew +5.4%yoy, driven by mortgages (+7.7%yoy) and auto (+18.2%yoy) respectively.

▲ Commercial loans +4.9%yoy to RM73.1b from all core markets.

▼ Wholesale banking gross loans fell -4.5%yoy to RM129.2b as the Group continue to focus on client profitability.

▲ Stellar NOII growth. NOII grew +14.4%yoy to RM5.39b contributed by growth in consumer fees, capital markets and client franchise income. Fees and commission income grew +6.2%yoy to RM2.47b while trading & FX income grew +22.4%yoy to RM2.93b.

▸ Slightly higher OPEX but slower pace than net income growth. OPEX in 9MFY24 rose +7.7%yoy due to personnel (+10.3%yoy to RM4.82b) and technology (+9.3%yoy to RM1.31b) expenses. However, CIR still improved -40bps yoy to 45.9% due to faster net income growth.

Forecasts unchanged. We maintain our earnings estimates as the result was within our expectations.

Key downside risks. (1) Steep NIM compression, (2) Sharp cost inflation, (3) Gross loans continue to decline Maintain BUY call: Unchanged GGM-TP of RM 9.11 (from RM9.11). The TP is based on an unchanged FY25F P/BV of 1.29x.

(GGM assumptions: FY25F ROE of 11.0%, LTG of 3.5% & COE of 9.3%)

Source: MIDF Research - 29 Nov 2024