PETALING JAYA: CIMB Group Holdings Bhd
’s net profit for the fourth quarter of 2024 (4Q24) is expected to ease by a high single-digit percentage on a quarterly basis, says RHB Research.
In a report on the financial institution, the research house said: “For CIMB’s upcoming 4Q24 results which will be out on Feb 28, 2025, ours and consensus’ 2024 profit after tax and minority interests (Patmi) imply 4Q24 net profit could ease by high single digits quarter-on-quarter (q-o-q), while year-on-year patmi could rise by mid-single digits.”
Group operating income is expected to be sequentially softer due to net interest margin (NIM) pressures.
According to RHB Research, the lower group NIM was impacted by a combination of policy rate cuts in Indonesia and Thailand, as well as and tight liquidity conditions.
Competition from government issuances in Indonesia and local seasonal deposit competition were also contributing factors.
Domestically, the group’s new deposit campaign rates for retail and wholesale moved up by five to 10 basis points (bps) during 4Q24.
However, the sequential NIM compression in 4Q24 was not as severe as the 10bps q-o-q drop in 4Q23.
RHB Research stated that in January, the group saw some recovery in NIM due to the timing of deposit repricing from policy rate cuts and deposit campaign rates returning to pre-4Q levels.
Meanwhile, non-interest income showed some moderation, which the research house attributed to a softening in trading and foreign-exchange income compared to the elevated levels in 3Q24.
“Underlying fee income was resilient, with both wholesale and retail fees holding up, but management guided that net fee income would be impacted by card fee expenses for both Malaysia and Indonesia.”
On the whole, the group’s asset quality remained intact, and CIMB has not seen any notable signs of stress.
Citing the group, RHB Research noted that the consumer portfolio in Thailand has shown improvement, offering management some optimism that the worst may be over.
In Malaysia, an earlier uptick in the auto portfolio has started to stabilise.
Additionally, CIMB has made minor provisions for its Indonesian consumer book.
While uncertainties remain regarding prospects for data centres, it was noted that CIMB’s borrowers are likely to proceed with their respective plans, supporting loan growth moving forward.
RHB Research highlighted that CIMB’s approved data centre-related loans stood at RM1.5bil, with only a small portion drawn down, while the pipeline remained stable.
RHB Research made no changes to its earnings forecast on CIMB, maintaining a “buy” call with an unchanged target price of RM9.25 per share.
The counter closed 1.12% down at RM7.94 yesterday.
