PETALING JAYA: CIMB Group Holdings Bhd
’s shares declined in heavy trading despite the unveiling of its new six-year strategic roadmap called Forward30.
Yesterday, the country’s second-largest bank by asset size was the main laggard among FBM KLCI constituents, closing 3.85% lower to RM7.50.
The reason for the selldown is unclear, but Citi Research has downgraded CIMB from “buy” to “neutral” on Tuesday, lowering its target price from RM9.10 to RM7.80.
According to Investing.com which carried a summary of the report, the revision reflects a more conservative stance on the bank’s net interest margins (NIMs) and long-term return on equity (ROE).
The downgrade comes after a two-year period during which CIMB was rated a “buy”.
The change in outlook is partly due to revised earnings expectations for the fiscal years 2025 and 2026, which have been lowered by 6% to 7%.
Citi now expects flat earnings for CIMB in 2025 and expects the dividend payout ratio to remain steady at 55%.
Futhermore, Citi has also adjusted its long-term ROE projection for CIMB.
It has brought it down to 11.4% from the previous estimate of 12.2%.
This new target price implies a 1.1-times price-to-book ratio based on a 12-month forward estimate of an 11% ROE.
Citi said there could be potential headwinds for NIMs moving forward.
This is mainly due to the cost of funds pressure in Indonesia, which is expected to continue affecting the banking group’s NIM this year, it said.
The report noted that falling benchmark rates in Singapore and Thailand compound this situation.
According to data compiled by Bloomberg, analysts covering CIMB mostly had a “buy” call on the stock with 16 or 76.2% of analysts rating it a “buy” and five or 23.8%, a “sell”.
On Wednesday, CIMB launched its Forward30 strategic plan, which is a new six-year roadmap designed to accelerate growth.
By 2030, CIMB aims to be in the top three for Net Promoter Score, achieve a top-quartile ROE among regional peers, maintain a 45% current account savings account ratio, a 33% to 34% non-interest income ratio, and a cost-to-income ratio in the low 40s.
Commenting on this, Hong Leong Investment Bank (HLIB) Research said there were a lot of strategies and focus areas similar to the competition.
“We reckon execution is key and to back this up, CIMB has shown its capabilities to deliver results over the past four years.
“Also, the bank still has a lot of levers to pull to help achieve its shorter-term ROE target of 12% to 13% in 2027,” HLIB Research said.
“Overall, forecasts are unchanged.
“In our opinion, the recent share price pullback provides a rare opportunity to buy the stock on weakness.
“At current levels, we find its risk-reward profile has become even more attractive,” it added.
HLIB Research maintained its “buy” call on CIMB and its Gordon growth model-derived target price of RM9.20 per share, based on a 1.29 times financial year 2026 price-to-book ratio.
