PETALING JAYA: The financial results of CIMB Group Holdings Bhd’s 92.5% indirectly-owned subsidiary, PT Bank CIMB Niaga Tbk’s (CIMB Niaga), were within analysts’ expectations but most are not upgrading their earnings estimates for the lender just yet, amid a cautious outlook.
Kenanga Research said the group’s Indonesian operations would continue to gain market share in 2022 by capitalising on economic revitalisation.
“However, net interest margin or NIM normalisation may undermine earnings potential. We keep our group-level estimates unchanged for now,” the research house said.
CIMB Niaga reported a 103.8% year-on-year (y-o-y) growth in its net profit for 2021.
Typically, CIMB Niaga makes up 15% to 20% of CIMB Group’s pre-tax profit, Kenanga said.
The research house noted that with the close of 2021’s accounts, the lender’s management was hopeful it would perform better in customer acquisition with a 4% to 6% loan growth target in mind versus 3.9% in 2021, backed by strong economic recovery in a “previously suppressed” economy.
“However, the heydays of high NIMs will likely not repeat, as the effects of repricing will be more prevalent and could lead to softness of up to 20 basis points.
“That said, management is confident that operational efficiency will remain intact and that should translate meaningfully to group fundamentals,” it said.
TA Research in its report said it was making no change to its earnings estimates for CIMB. “We maintain CIMB’s target price at RM5.80. Our valuation is based on an implied price book value (PBV) of about 0.95 times.
“However, given that the share price has risen since our last review, we downgrade our call for CIMB from a ‘buy’ to a ‘sell’, as total potential upside has narrowed.”
Maybank Investment Bank’s research unit said CIMB Niaga’s 2021 net profit was within expectations. It has upgraded CIMB Niaga’s 2022 to 2024 net earnings by 8% to 14% on the back of lower credit cost assumptions.
“This translates to a potential 2% to 4% uplift to CIMB’s earnings. We maintain CIMB Group’s forecasts for now, pending the release of the group’s results on Feb 28 as well as our ‘hold’ call and target price of RM5.40, pegging on a 2022 PBV of 0.9 times,” it said.