KUALA LUMPUR, Dec 1 ― Aminvestment Bank Bhd (Aminvest) has maintained a “buy” call on CIMB Group Holdings Bhd, with a revised fair value of RM6.20 per share from RM5.80 per share following the group’s strong third-quarter 2021 (Q3 2021) results.
Aminvest said CIMB Group had posted a strong operating income and improved cost-to-income (CI) ratio.
“We raise our financial year (FY) 2021 and 2022 net profit by 8.7 per cent and 2.6 per cent, respectively, to reflect lower credit cost and CI ratio assumptions,” it said.
It said CIMB Group’s cumulative nine months 2021 (9M2021) normalised net profit also grew 250.8 per cent year-on-year (y-o-y) to RM3.93 billion, contributed by higher total income and lower provisions, though this was partially offset by marginally higher Business-As-Usual (BAU) operating expenditure.
“CIMB Group’s earnings were also above expectations, accounting for 82.5 per cent and 87.2 per cent of ours and consensus estimates, respectively.
“The group's gross loans grew at a faster rate of 0.9 per cent quarter-on-quarter (q-o-q) or 1.6 per cent y-o-y, while the growth of consumer loans was partially offset by a contraction in commercial and wholesale banking loans,” Aminvest said.
Kenanga Research also maintained its ‘market perform’ call on CIMB Group, with a higher target price (TP) of RM5.20 per share from RM4.75 per share following the group’s Q3 2021’s performance.
It said the bank management is confident of meeting its year-end target, save for loans growth.
“Headwinds may only arise if Covid-19 worsens but the buffers in place may cushion any immediate impact.
“The group opined that a strong performance in FY21 will make up for the heavy shortfall in FY20,” it said.
The research house noted that CIMB Group’s regional exposure have yet to prove to be a boon or a bane, depending on how well the respective countries could be exposed to worsening Covid-19 cases.
Echoing the two research houses, MIDF Research has upgraded its ‘neutral’ stance on CIMB Group to ‘buy’, with an unchanged TP of RM5.55 per share.
“CIMB has a number of headwinds in the short term such as a high gross impaired loan ratio, heavy provisions and weak loan growth.
“Nonetheless, we continue to favour CIMB Group for several reasons ― its kitchen-sinking exercise is bound to bridge its return on equity ratio and return on capital employed gap, a streamlined loan portfolio following its current restructuring and its heavy exposure to the regional market,” MIDF added.
At midday, CIMB Group’s shares were down by 2.51 per cent or 13 sen to RM5.05. ― Bernama
