PETALING JAYA: CIMB Group Holdings Bhd’s commitment on sustainability reflects a stronger focus on its journey towards a sustainable business. The group also sees new business markets and opportunities arising from this commitment.
According to PublicInvest Research, CIMB Group has been making notable headway in its sustainability-based initiatives since 2019.
It is increasingly an important aspect in investors’ assessments and investment considerations. In its latest report, the research house is optimistic that the group will meet its immediate 2024 goals given the management’s focus on sustainability. While PublicInvest Research remained optimistic on CIMB’s longer-term prospects, it retained a “neutral” call given limited upside to the group’s unchanged dividend-derived target price of RM5.10 a share.
AmInvestment Bank Research on the other hand maintained a “buy’’ call on CIMB Group with an unchanged fair value of RM5.80 per share. This is based on the financial year ended 2022 (FY’22) return on equity (ROE) of 9.5% leading to a price-to-book value of 0.9 times. The research house said, the stock remains one of its top picks for the banking sector. It is one of the sector’s stocks with higher liquidity and is poised to benefit from foreign fund inflows. The research house projects an improved ROE of 9.5% in FY22 supported by higher total income and lower provisions. It did not make any changes to its earnings estimates.
On the new business markets and opportunities from its sustainability commitments, AmInvestment Bank Research said for corporate clients, opportunities will emerge in potential green financing, sustainability linked loans, issuance of sustainable bonds or sukuks and transition finance.
There is potential for advisory, micro financing to farmers and renewable energy financing to be offered to SMEs, it added. As for individual clients, the research house said preferential rates could be offered for green home and vehicle financing while home, personal and vehicle financing will be made accessible to the B40s. With its sustainability agenda, CIMB Group aims to enable new and existing customers to grow in areas which will have positive economic, environmental and social impacts.
Also, its customers will be incentivised to embed positive environmental, social and governance (ESG) practices into their businesses and lifestyles, the research house noted.
The group seeks to improve the financial literacy of its customers with knowledge-sharing and mentoring programmes as well as achieving a more inclusive financing with loans available to clients. It will mobilise RM30bil towards sustainable finance as part of its continued ambition toward becoming an Asean sustainability leader by 2024.
It has also announced its commitments towards mitigating climate change, while committed to invest RM150mil over five years, and RM100,000 in employee volunteerism hours annually by 2024 to positively impact lives, communities and businesses across Asean.