Bank Islam Malaysia Berhad - 3QFY24 Results: Weak Quarter but Expected to Recover

Date: 
2024-12-02
Firm: 
MIDF
Stock: 
BIMB
Price Target: 
3.06
Price Call: 
BUY
Last Price: 
2.58
Upside/Downside: 
+0.48 (18.60%)

KEY INVESTMENT HIGHLIGHTS

  • 9MFY24's Core NP of RM397m was Below/Below our/street forecasts: 66%/66% of full-year forecasts
  • Management's tone: Optimistic
  • Core themes: (a), (b), (c)
  • Forecasts unchanged
  • Maintain BUY | Unchanged TP of RM3.06 | based on an unchanged FY25F P/BV of 0.87x
Verdict: A weak quarter but management expect that there will be improvement in 4QFY24. This is highlighted by unchanged guidance. Excellent dividend yield.
Yays
  1. Strong gross loans growth, while
  2. Deposits growth keeping track of loans growth.
  3. Lower provisions.
  4. NIM improvement for 9MFY24.
Nays
  1. OPEX continue to increase.
  2. NOII decline in the quarter.
OKs
  1. GIL ratio uptick but still better than industry's.

Results in a nutshell:

▸ 9MFY24's Core net profit (NP) of RM397m up by +1%yoy.

Higher net income (+1.6%yoy) and lower net allowances for impairment on financing (-29.9%yoy) moderate the higher OPEX (+7.9%yoy).

▼ 3QFY24's Core NP of RM130m down by -5%qoq. Due to lower net income and slightly higher provisions quarter-on-quarter.

▲ Gross loans grew by +0.5%qoq, coming up to +1.2%YTD. Growth driven by Retail, particularly by Housing Financing (HFA) and Personal Financing (PF), and Commercial.

▲ Deposits grew by -1.5%qoq, coming up to +1.9%YTD. Growth driven by increase in Tawarruq Term Deposits and Ihsan Sustainability Investment Accounts (ISIA).

▸ GIL moved by +10bps to 1.02%, LLC currently at 114%. Upticks due to institutional banking but retail GIL ratio saw improvement.

Have a look at:

▲ NII provided support. Net income growth was mainly driven by a +4.4%yoy increase in NOII to RM1.52b, this was due to year-on-year increase in investment securities and financing growth. Consequently, NIM improved by +5bps to 2.15% for 9MFY24.

▼ NOII was weak. Lower NOII was due to reduced net gains from foreign exchange transactions and lower investment income. However, higher fees and commission income, mainly from wealth management fee and banca takaful production bonus & facilitation fee, cushioned the impact.

▼ Higher OPEX due to IT investment. OPEX rose +7.9%yoy. It grew faster than the net income growth as the Group continue to invest in digital and technology initiatives for futureproofing.

Forecasts unchanged.

Key downside risks. (1) Continuous higher OPEX, (2) NIM compression, (3) Asset quality deterioration Maintain BUY call: Unchanged GGM-TP of RM 3.06. The TP is based on an unchanged FY25F P/BV of 0.87x.

(GGM assumptions: FY25F ROE of 8.3%, LTG of 4.5% & COE of 8.8%)

Source: MIDF Research - 2 Dec 2024

Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment