BIMB: Financial Sector Player Navigates Headwinds with Robust Non-Interest Income

A prominent financial sector player announced its 9M25 results, which, while aligning with internal estimates, fell short of street expectations. The bank’s performance for the third quarter of 2025 saw net profit at MYR129.2 million, a slight 1% decrease year-on-year but a 2% improvement quarter-on-quarter. For the nine-month period, net profit reached MYR382.2 million, marking a 4% year-on-year decline and forming 77% of internal and 71% of consensus full-year estimates.

Net interest income (NII) experienced a 6% quarter-on-quarter dip in 3Q25, primarily due to a 17 basis points (bps) compression in net interest margin (NIM). However, this was effectively counterbalanced by the robust performance of non-interest income, which recorded a 1% quarter-on-quarter and a significant 91% year-on-year increase. Additionally, softer credit costs, down to 17bps from 24bps in 2Q25, contributed positively. Despite these efforts, the bank’s 9M25 Return on Equity (ROE) of 6.7% remained below its own >7% management target for the year.

Operational Strengths

Operational performance highlights include a healthy 7% year-on-year gross financing growth in 3Q25, driven by a strong pick-up in the institutional banking segment. Corporate and commercial financing saw impressive growth of 20% and 9% year-on-year, outperforming the retail segment’s 5% growth. Deposits and investment account growth kept pace with financing, maintaining a stable financing-to-deposits ratio. Asset quality remained largely stable, with the gross impaired financing (GIF) ratio at 1.04%, though a slight sequential uptick in retail GIF was noted, expected to be seasonal.

Future Outlook and Strategic Focus

Looking ahead, the bank has maintained its FY25F guidance, including a NIM of >2%, financing growth of 6-7%, and ROE of >7%. However, analysts note potential downside risks to the ROE target, particularly as the strong treasury gains recorded in 9M25 may not be easily repeatable in the final quarter. Management indicated a strategic shift towards higher-yield assets in the SME sector and an expansion of non-interest income streams, such as wealth, gold, and pawnbroking, moving away from a primary focus on the retail segment.

Analysts from RHB maintain a “Neutral” rating for the financial institution with an unchanged target price of MYR2.15. This target price incorporates a 2% ESG discount. The unchanged forecast reflects that current results are largely in line with the investment bank’s estimates.