PETALING JAYA: BIMB Holdings Bhd’s restructuring exercise is still on track for completion by the third quarter (Q3) of financial year 2021 (FY21), barring administrative issues arising from the movement control order (MCO).

       This was conveyed by BIMB chief financial officer Azizan Abd Aziz during a recent meeting hosted by Kenanga Research. Post-restructuring, Azizan said the commercial agreements with Syarikat Takaful Malaysia Keluarga Bhd will continue as “BIMB wants to leverage on the existing bancassurance agreements. At present, there are no plans for the bank to develop its own takaful products.”

       Meanwhile, Kenanga Research is confident with the banking group’s medium-term sustainability. The research house said BIMB’s management was also confident of handling the new blanket six-month moratorium, which was introduced with an opt-in clause in comparison with the previous automatic moratorium requiring an “opt-out” application by customers.

       “With the present conditions, management expects not more than 50% of applicable accounts will seek a moratorium (at present, one third has applied) and this should translate to an equal exposure of half of FY20’s RM130mil modification loss incurred.

       “Most of the customers who sought the moratorium are small and medium enterprises (SMEs) and micro SMEs, ” Kenanga Research said in its report.

       On the other hand, BIMB group sustained its low targeted repayment assistance (TRA) mix of less than 10% of gross loans, given that most of its customers are within the government sectors.

       “We believe that the group will continue to benefit from such low TRA levels, as income security concerns are less apparent here as opposed to professional customers and business owners.

       At the same time, the banking group’s financing growth was still robust at about 10% in FY20 as it enjoyed high demand in the household space. “For FY21, the BIMB management expects its 7%-8% growth target to be still achievable despite ongoing MCOs. However, this is due to low levels of loan redemption keeping the bases high.

       “Also, applications are presently held back due to a backlog from physical applications, which the management expects to be cleared progressively, ” said Kenanga Research.

       It added that households remained the key driver of financing growth with business loans remaining tepid.

       The research house has maintained an “outperform” call on BIMB with a sum-of-parts-driven target price of RM5.10.