PETALING JAYA: Despite short-term headwinds, CIMB Group Holdings Bhd’s current share price weakness offers an attractive buying opportunity.

       Year-to-date, the share price is down by 7%.

       MIDF Research said CIMB’s current share price is “attractive” despite the challenges related to the banking group’s lumpy corporate exposure, asset quality, heavy provision and uncertainty over its double-crediting error.

       The research house upgraded its call to a “buy” from “neutral”, with a target price of RM5.55.

       “Our target price is derived by pegging its financial year ending Dec 31, 2022 (FY22) book value per share to an unchanged price-to-book value of 0.95 times,” it added.

       Similarly, Kenanga Research has also upgraded CIMB’s call to an “outperform” from “marketperform”.

       It said that the share price represented a buying opportunity.

       “We believe current price levels may present a buying opportunity for the stock with the softer sentiment arising from the recent ‘MoneySend’ issue which bears no long-lasting implications to the group, given that remedial measures are being implemented.

       “Post update, the stock would register the strongest year-on-year earnings per share improvement amongst its peers (31% vs. 20%)” said the research house.

       Earlier this year, a processing error by a remittance service ‘MoneySend’ caused fund transfers to customers to be wrongly credited twice.

       To recover the duplicate payments, the bank earmarked and froze affected accounts.

       However, after attending CIMB’s pre-first quarter ended March 31 (1Q22) results briefing, Kenanga Research cautioned that the bank faces possibly higher provisions amid the ongoing double crediting issue and industry-specific headwinds.

       The group booked RM281mil provision concerning processing errors in 4Q21.

       Meanwhile, RHB Research said CIMB would continue to see moderate loan growth, with a slight pick-up in 1Q22 on modest sequential growth in Malaysia, Indonesia and Singapore.

       The research house added that another positive for CIMB was the stable cost of funds, translating into a sustained net interest margin in 1Q22.

       RHB Research has forecast a net profit of RM1.07bil for 1Q22 for CIMB.

       CIMB is scheduled to release its 1Q22 results on May 31.

       Hong Leong Investment Bank also expects the group to record a “decent top-line” performance results, anticipating a stronger loan growth, better non-interest income on a quater-on-quarter basis and slippage in net interest margin.

       “However, net credit cost or NCC should remain elevated, capping performance,” it said.