CIMB Group forms tie-up with Juwai IQI

CIMB Islamic chief executive officer Ahmad Shahriman Mohd Shariff and co-founder and group CEO of Juwai IQI Kashif Ansari,

KUALA LUMPUR: CIMB Bank Bhd and CIMB Islamic Bank Bhd have entered into a partnership with Juwai IQI, Asia’s largest proptech group, to provide property financing to the latter’s customers in Malaysia.

In a statement yesterday, CIMB Group said this would allow the banks to provide a one-stop centre solution with a wide range of financial needs for Juwai IQI.

“We are proud to be the first Malaysian-based bank to offer syariah-compliant and sustainable solutions to Juwai IQI’s customers including financing, takaful, deposits, investments and other banking services,” said CIMB Islamic chief executive officer Ahmad Shahriman Mohd Shariff.

With the overnight policy rate at a record low of 1.75%, he noted that consumers were taking advantage of mortgage rates as well as looking at other asset classes to generate higher yields.

Based on Bank Negara’s monthly loan application data, the value of home loan applications grew 86% year-on-year to RM179.4bil in the first half ended June 30, 2021 (H1) from RM96.4bil in the same period last year.

Juwai IQI has been operating in Malaysia since 2012, selling and renting properties with a combined value of over US$1bil (RM4.16bil) in total in 2020.

“Since making Malaysia our regional South-East Asian headquarters for our real estate business in 2016, we have grown 10-fold as a leading Asean proptech group. We are looking forward to this partnership,” said Kashif Ansari, co-founder and group CEO of Juwai IQI.

Ahmad Shahriman foresees stronger growth for its consumer banking business this year and anticipated higher demand for real estate in the region in line with the global economic recovery.

Meanwhile, analysts have remained mostly optimistic about CIMB’s prospects.

In fact, UOB Kay Hian said pre-emptive provisions for the bank may have peaked in the third quarter (Q3) of this year although asset quality will likely only show signs of deterioration from 2022 onwards once the repayment assistance gradually winds down.

“As most of the top-up in H2 pre-emptive provisions is expected to be frontloaded in Q3, we believe that 2021’s credit cost could peak in Q3.

“Coupled with the ongoing economic reopening, we expect a sustained improvement in CIMB’s net credit cost from Q4 onwards,” the brokerage said.

It added that the three-month interest waiver scheme for the B50 segment under the Resilience Programme (Urus) will be targetted, whereby banks will work together with the Credit Counselling and Debt Management Agency to filter out B50 loan customers who are in genuine need of financial assistance before such interest waivers can be granted.

As such, management opines that the increase in the take-up rate for this repayment assistance is unlikely to rise significantly.

Management has also started seeing a promising pick-up in loan growth momentum since September.

Given its strong earnings growth off a low base, attractive valuations, large cap and liquid high beta nature, UOB Kay Hian believes the group remains well positioned to benefit from the economic recovery.

The research house kept its “buy” call on CIMB with a higher target price of RM5.95.

TA Securities Research is similarly optimistic about the banking group with its “buy” call and target price of RM6.10, based on implied price-to-book value (PBV) of about 1.01 times.

However, given the rise of its share price recently, MIDF Research opined that the positive prospect of the group has largely been priced in.

“Hence, we downgrade our call to ‘neutral’ from ‘buy’. We tweak our target price to RM5.55 (from RM5.60 previously) to account for the effects brought about by Urus,” it said.

MIDF’s target price is derived by pegging its FY22 book value per share to an unchanged PBV of 0.95 times.

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