RHB Research has maintained a “Buy” recommendation for CIMB Group Holdings Bhd at TP of RM6.30, 14% upside, and c.3% yield.
It said that at an analyst meeting ahead of the 28 Feb release of 4Q21 results, management’s updates point to a quarter of stable operations with the group tracking its financial targets.
RHB expects the share price to trend higher on healthy earnings growth in FY22-23 and still decent valuation. Our TP is based on an intrinsic value of MYR6.15 and a 2% ESG premium.
It said that the pick-up in loan growth seen in 3Q21 has continued into 4Q21, and management expects this to be sustained into 2022.
It said that CIMB’s loan portfolio will likely grow at a slower pace than the industry’s due to ongoing efforts to reshape its books in Indonesia and Thailand. In Malaysia, motor, mortgages, and small & medium enterprise or SME loans are key growth drivers. We expect CIMB to end FY21 with 2.5% loan growth (9M21: +2.4% annualised).
RHB said that including a modification loss, management said 4Q21 group NIM was stable QoQ. Although NIMs narrowed in Singapore (deposit competition) and Indonesia (excess liquidity), these were cushioned by a stable margins in Malaysia.
It said that for FY22, CIMB expects a slight contraction in group NIM, mainly on funding cost pressures in Indonesia and Singapore with margins in Malaysia stable. It expects policy rates to rise by 25bps in Malaysia, Indonesia, and Thailand in 2H22 with a 12-month impact estimated to add MYR80-100m in NII and 2bps in NIM for Malaysia. However, NIMs are expected to slip in Indonesia and Singapore.
