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CIMB: Solid Operational Performance Drives Positive Outlook, Target Price Raised
| Key Information | Details |
|---|---|
| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading regional bank is on track to meet operational expectations for the third quarter of fiscal year 2025 (3QFY25), underpinned by stable core financial metrics and a robust outlook for loan growth. Despite some anticipated headwinds, analysts maintain a positive stance on the institution’s strategic discipline and resilient performance, leading to an upgraded target price.
Performance Review
For 3QFY25, the bank anticipates a moderated net interest margin (NIM), primarily influenced by compression from Singapore’s SORA and Malaysia’s OPR cuts. However, this is expected to be counterbalanced by stronger non-interest income (NOII) and a steady net credit cost (NCC). Management expresses cautious optimism for NIM stabilization in 4QFY25, supported by ongoing repricing strategies and wider market spreads. The bank’s fee income growth is also projected to remain stable, indicating sound operational management.
Future Outlook and Strategic Drivers
The outlook for loan growth remains strong, with the lending book expected to gain traction in 4QFY25, fueled by a robust credit pipeline and active drawdowns across consumer and SME segments. Management indicates that a full-year loan growth target of 5-7% is achievable, further supported by improved liquidity in key Indonesian operations. Asset quality is also holding firm, with no material deterioration observed in higher-risk segments. Any marginal seasonal rise in non-performing loans (NPLs) remains manageable, ensuring stable credit costs and overall financial stability.
The institution continues to be highlighted for its disciplined strategy to enhance return on equity (ROE) and its strong financial health, evidenced by resilient year-to-date performance and a robust CET1 ratio. This strategic approach, coupled with effective cost management, supports a positive long-term trajectory and the potential for an elevated dividend payout ratio.
Investment Recommendation
Given these positive indicators and solid operational foundation, TA SECURITIES has issued a “BUY” recommendation for the bank’s stock. The investment bank has set a new target price of RM0.25, representing a significant 25.0% upside from the last traded price of RM0.20, reflecting confidence in the bank’s future prospects.
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