KEY INVESTMENT HIGHLIGHTS

• 9MFY24's Core NP of RM5,348m was Within/Within our/street forecasts: 79%/77% of full-year forecasts
• Core themes: (a) Strong NOII growth, (b) Robust loans growth, (c) Deposit growth keeping pace with loans growth.
• Forecasts unchanged
• Maintain BUY | Unchanged TP of RM5.16 | based on an unchanged FY25F P/BV of 1.63x

Results in a nutshell:

▲ 9MFY24's Core net profit (NP) of RM5,348m up by +6%yoy.

Driven by commendable net income growth (+5.4%yoy) and lower loans provisions (-30.2%yoy).

▲ 3QFY24's Core NP of RM1,913m up by +7%qoq. Contributed by robust net income growth (+4.9%qoq) and higher writebacks to RM20m vs. RM1m in 2QFY24.

▲ Gross loans grew by +0.9%qoq, coming up to +3.9%YTD.

Broad-based commendable growth in core financing segments. As a result, it posted above industry total loan growth. Gross loans for residential properties, commercial properties and hire purchase came in at +4.0%YTD to RM168.0b, +4.0%YTD to RM85.2b and +10.8%yoy to RM71.6YTD respectively.

▲ Deposits grew by +0.1%qoq, coming up to +3.0%YTD. Strong growth overall with FD expansion being the main contributor. FD grew +9.4%YTD to RM225.6b. Meanwhile, CASA also grew +0.4%YTD to RM117.8b.

▲ GIL moved by -2bps to 0.62%, LLC currently at 154%. Sound asset quality, bolstered by low impaired loans ratio, healthy aging loan profile and high loan loss coverage.

Have a look at:

▲ NII expanded due to higher gross loans. 9MFY24 NII (inclusive of Islamic banking) grew +4.4%yoy supported by higher gross loans.

This was despite a minor compression of -1bps in NIM due to the compression in 2QFY24. However, NIM expanded by +5bps qoq in 3QFY24 resulting in a robust quarterly increase in NII.

▲ NOII a stellar performer. Total NOII (inclusive of Islamic banking) grew +9.6%yoy for the 9MFY24. This was by net fee and commission income which climbed by 12.7%yoy to RM1.65b. Meanwhile, net gains on financial instruments grew +>100%yoy. Overall, the resulted in an enhanced contribution of NOII to total income at 20.5% from 19.7% same period a year ago.

▼ OPEX came in higher. OPEX grew +9.3%yoy. This was led by higher personnel cost which rose +11.1%yoy to RM2.66b.

As result, CIR inched +1.2ppt higher to 34.9%. Nevertheless, we are not overly concerned at current juncture given the robust net income growth.

Forecasts unchanged.

Key downside risks. (1) cost inflation leading to higher OPEX, (2) NIM compression.

Maintain BUY call: Unchanged GGM-TP of RM 5.16. The TP is based on an unchanged FY25F P/BV of 1.63x to reflect altered earnings prospects and ROE-based valuations.

(GGM assumptions: FY25F ROE of 12.0%, LTG of 3.5% & COE of 8.7%)

Source: MIDF Research - 2 Dec 2024