MIDF Research: CIMB to get earnings boost from CIMB Niaga

The latest bancassurance deal that came on the radar of investors was the strategic partnership between CIMB Group Holdings Bhd and Japan

KUALA LUMPUR: MIDF Research believes that the excellent PT Bank CIMB Niaga Tbk (CIMB Niaga) result will provide a boost to CIMB Group’s 1QFY17 earnings. 

“We like the fact that CASA (current account savings account) growth remained solid. We believe that this had led to NIM being protected and contributed to the continued robust NII growth. 

“We believe that this will remains the case for the rest of the year. In addition, we believe that loans growth will pick up in the remaining quarters as CIMB Niaga wind down its auto loans and continue to grow its other segments,” MIDF said.

The research house said CIMB Niaga’s asset quality remained a concern but there were improvements. 

All-in-all, MIDF continue to be optimistic on the prospect of the group, especially in Malaysia and Indonesia. 

“We maintain our ‘buy’ recommendation with unchanged target price of RM6.40 is based on PB multiple to 1.2 times,” MIDF said. 

CIMB Niaga reported an unaudited consolidated net profit of 640 billion rupiah (RM208.9mil) in the first quarter (Q1) of 2017, which represented a 137.9% year-on-year (y-o-y) growth.

This was driven by higher net interest income and lower provisions. On a quarterly basis, it was driven by higher non-interest income (+22.8%qoq) and lower provisions (-9.7%qoq).