Bank Islam Malaysia (BIMB) reports a 1HFY23 net profit of RM254.2m. No dividend was declared as BIMB typically announces a single payment in the year, safe for FY22.
“YoY, 1HFY23 total Islamic income grew by 6% as BIMB sat on a larger gross financing base while net interest margins appear to be growing,” said Kenanga Research (Kenanga) in the recent Results Note.
Meanwhile, investment income surged by 54% on the back of better securities disposal gains during the period. Despite the higher
top line, cost-income ratio was relatively stable at 61.5% as personnel expenses increased in tandem.
“We also saw credit cost rising to 37 basis points as certain accounts may be strained by the mounting interest rate pressures. All in, 1HFY23 net earnings were still able to improve by 14% to RM254.2m thanks to the higher top line,” said the research house.
On hindsight, BIMB appears to be gathering strong traction with its financing growth, which they observed to be mainly derived from home and personal financing.
On the flipside, rising credit costs may raise a cause for concern should the group’s portfolio be predominantly made up for newly delinquent accounts, as observed with its peers recently.
“While the stock may see interest from shariah-seeking investors paired by commendable dividend yields of 7%, we believe it may be fairly valued at current price points given its moderate earnings growth prospects in addition to its lower return on equity as compared to its peer average,” said Kenanga.
Risks to their call include higher/lower-than-expected interest margin, higher/lower-than-expected financing growth, worse-than-expected deterioration in asset quality, slowdown in capital market activities, currency fluctuations, and changes to the overnight policy rate.
