According to RHB research, BIMB has kept its financing growth target for FY19 unchanged at 6% to 7%.
It said the bank achieved 7.2% year-on-year (y-o-y) growth in gross financing in 1H19 despite lending momentum being impacted by festivities, as household financing grew about 7% y-o-y.
"We expect financing growth to rebound in 2H19, again riding on the strength in household financing," said RHB.
BIMB's net financing margin (NFM) is expected to compress 6-8bps in FY19 due to the 25bps cut in the overnight policy rate in May.
Given the average deposite tenure of five to seven months, RHB expects NFM to see a recovery in 1Q20, short of a further OPR cut.
BIMB is targeting a full-year NFM of over 2.5%, as compared to 2.56% in 2Q19.
RHB said the bank, which owns about 60% equity interest in STMB, stands to benefit from the latter's stellar performance.
In 3Q19, STMB beat market estimates with a 34% y-o-y increase in net earnings. The takaful provider accounts for 34% of BIMB's total operating income
Meanwhile, BIMB's management does not foresee any systemic risks arising from its lending portfolio and expects full-year credit cost to remain at about 20bps.
"The bank has been proactively resolving debts that are undergoing the reschedule and restructuring (R&R) programme, and expects recoveries in 4Q19.
"We pencil in a higher credit cost assumption of 26bps to be conservative," it said.
BIMB's restructuring plan is ongoing with a plan presented to major shareholders and the regulators, and is pending approvals. The bank targets to complete the restructuring by 3Q20.
RHB has kept its buy rating on BIMB with a target price of RM5 based on 1.5x FY20F P/BV.
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