Maybank IB maintains forecasts for CIMB as it expects the banking group to deliver a decent 4Q results, the FY23E ROE forecast of 10.2% is at the lower end of management’s target of 10.2-11% (10.7% in 9M23) and provides room for
positive surprise, it said.
CIMB Niaga and CIMB Group are scheduled to announce their 4Q23 results on 21 Feb and 29 Feb respectively. Maybank expects the group’s 4Q23 earnings to be higher YoY, given that credit cost had been particularly high in 4Q22 at 70bps. Credit cost averaged 32bps in 9M23 and this compares against assumption of 40bps for FY23, which thus implies a 4Q23 credit cost of 48bps.
Deposit competition picked up QoQ on the retail and wholesale fronts in 4Q23, but this tends to be seasonal in nature. More importantly, the competition has not been as intense as it was towards end-4Q22/early 1Q23. The forecasts currently assume a NIM compression of 27bps in FY23 (-26bps in 9M23) and a marginal 3bps improvement in FY24.
Sequentially higher credit costs in 4Q23?
Credit cost levels are likely to be sequentially higher in 4Q23, due to higher provisions in Thailand and Malaysia (from a low base in 3Q23). Nevertheless, this has already been factored into our estimates, given that the house has assumed 40bps credit cost in FY23, against an average of 32bps in 9M23. Conservatively, Maybank has maintained elevated credit cost
assumptions of 40bps into FY24 as well.
