Analysts are cautiously optimistic about CIMB’s overall trajectory.
PETALING JAYA: CIMB Group Holdings Bhd
’s earnings outlook remains stable but is increasingly dependent on domestic performance, even as its Indonesian subsidiary, PT Bank CIMB Niaga Tbk (CIMB Niaga), has delivered a commendable start to the financial year.
Analysts are cautiously optimistic about CIMB’s overall trajectory, citing currency headwinds and regional funding pressure as potential drags on group-level earnings.
Kenanga Research noted that CIMB Niaga kicked off 2025 with a strong showing, underpinned by loans growth, net interest margin (NIM) and credit cost falling within the guided range.
The brokerage added that while Indonesia’s deposit competition is “unrelenting”, CIMB Niaga is navigating the liquidity squeeze with a targeted loan-to-deposit ratio (LDR) of 90%.
“CIMB Niaga expects it will operate comfortably at an LDR ratio of 90% and will defend NIMs by targeting higher yielding fixed-rate markets such as small and medium enterprises, hire purchase, unsecured segments,” it noted.
Despite this, Kenanga Research pointed out that CIMB’s earnings growth prospects are “most likely (to) hinge on its Malaysian operation’s efforts to boost wholesale banking businesses, as well as driving its fee-based income.”
It maintained an “outperform” call on CIMB, with a target price (TP) of RM7.90 per share, while acknowledging that CIMB Niaga’s overall contributions to the group would be eroded despite the latter meeting its targets and street estimates.
TA Research echoed a broadly positive tone, stating, “Overall, the first quarter of financial year 2025 was a solid start to the year, with CIMB Niaga demonstrating good momentum despite macroeconomic headwinds and global uncertainties.”
The research house emphasised CIMB Niaga’s commitment to a deposit-led strategy and noted that its contribution to the group’s pre-tax profit was 25% in 2024.
However, it cautioned that foreign-exchange volatility could weigh on reported earnings. TA Research estimated that a 10% rupiah-depreciation could reduce group pre-tax profit by 2% to 3%.
Despite this, it kept its earnings forecast unchanged and reaffirmed a “buy” rating on CIMB, with a TP of RM8.34.
Hong Leong Investment Bank Research also retained a constructive stance, citing CIMB Niaga’s ongoing portfolio rebalancing efforts and adequate buffers to support asset quality.
The research house maintained its “buy” call on CIMB, raising the TP to RM9.20, arguing that the group remains the cheapest big-cap bank under its coverage.
