PETALING JAYA: CIMB Group Holdings Bhd
’s results for its financial year 2024 (FY24) are within expectations, according to analysts.
The banking group reported a FY24 net profit of RM7.7bil, translating to a 10.7% year-on-year (y-o-y) growth, thanks to higher operating income and lower loan allowances.
Fourth-quarter earnings rose 5% y-o-y but fell 11% quarter-on-quarter, amid the drop in net interest margin (NIM) sequentially.
“The results were within expectations, making up 98% to 99% of our and consensus full-year forecasts,” said Hong Leong Investment Bank (HLIB) Research in a note.
The research house, which maintained its “buy” call, expects CIMB to “shine” in current market climate as investors take refuge from Trump 2.0 uncertainties.
“Moreover, it is a good dividend paymaster, providing yields of about 6%,” it said.
Looking ahead, HLIB Research expects CIMB’s NIM to remain stable sequentially given easing seasonal fixed deposit rivalry and scope to optimise its relatively low loan-to-deposit ratio of 91%.
In addition, this will be padded by CIMB’s strict asset pricing and deposit-led strategy.
“That said, credit growth is seen to regain some ground given resilient economic conditions.
“Separately, we anticipate net credit cost to normalise up to 30 basis points (bps) to 40 bps given the lack of write-backs at its Singapore operations this year.
“Besides, we are comforted with CIMB’s elevated loan loss coverage of 105% vs pre-pandemic’s about 75%,” according to the research house.
Meanwhile, TA Research pointed out that CIMB’s loans and advances portfolio had shown resilience across key segments and all operating markets in FY24.
Total deposits widened by 2.9% y-o-y, underpinned by consumer banking (3.2% y-o-y) and commercial banking (4.9% y-o-y).
Wholesale banking turned around to increase by 1.5% y-o-y.
By type, current account and savings account (CASA) balances further improved, rising by 7.7% y-o-y, bringing the CASA ratio up year-on-year to 43.1%.
“Incorporating FY24 results, we tweaked FY25 and FY26 net profit to RM8.17bil and RM8.78bil from RM8.03bil and RM8.56bil, respectively.
“We forecast FY27 net profit to rise by 8.9% to RM9.56bil.”
TA Research further added that CIMB’s disciplined approach to asset pricing and deposit-led strategies drove stronger loan and CASA deposit growth, while the NIM remained stable despite rate cuts in some key markets.
“Under its Forward23+ strategic plan, CIMB achieved commendable results, although some targets were narrowly missed.
“Return on equity (RoE) expanded to 11.2% in FY24 from just 2.1% in 2020, though slightly below the Forward23+ 11.5%-12.5% target.
“Similarly, the cost-to-income (CTI) ratio came in at 46.7%, falling short of the sub-45% ambition.
“However, asset quality saw meaningful improvements, with credit cost reduced to 25bps from 151 bps – well below the Forward23+ target of 50 bps to 60 bps.
“The Common Equity Tier (CET) 1 also strengthened to 14.6%,” it said.
Looking ahead, TA Research said CIMB’s management anticipates healthy loan growth to mitigate potential NIM compression, supported by a strong client franchise and disciplined asset pricing.
Investments in technology will continue, though cost discipline should keep the CTI ratio stable.
“Credit cost is projected to normalise to 30 bps to 40 bps, while the group targets a CET1 ratio of over 14% and maintains a dividend payout of 55%.
“RoE is expected to be in the range of 11% to 11.5%,” said the research house.
HLIB Research and TA Research have retained their target prices for CIMB at RM9.20 and RM9.68 per share, respectively.
The CIMB stock closed at RMxx yesterday.
