Maybank Investment Bank Research trimmed CIMB’s net profit forecasts for 2025 and 2026 by 4.3% and 4.9% , respectively.
PETALING JAYA: CIMB Group Holdings Bhd
, which has a presence around the Asean region, is likely to see slower growth amid uncertainty due to the ongoing tariff war.
This was flagged by CIMB’s management, which sees potential downside risk to net interest margins (NIMs), UOB Kay Hian Research (UOBKH Research) said in a report.
“Management flagged two key downside risks to global trade from the ongoing US tariffs, namely, slower loan growth and potential policy rate cuts, which could pressure NIMs.
“Nonetheless, strong provision buffers offer a solid cushion against asset quality risks,” the research house said.
UOBKH Research said it was maintaining a “hold” call on CIMB with a lower target price of RM7.70 after trimming earnings by 5% to reflect the headwinds.
Despite value having emerged, the research house added that the stock continues to trade at historical mean price-to-book-value.
The group’s loan growth guidance remains on track, albeit likely skewed towards the lower end of the 5% to 7% target range for this year, as liquidity constraints at Indonesia’s CIMB Niaga and potential macroeconomic headwinds weigh on momentum.
According to the research house, CIMB’s management alluded that channel checks with clients indicated that business sentiment remains cautious in the aftermath of US tariffs, with clients adopting a wait-and-see posture that reinforces a more guarded lending stance.
Corporate lending softened in the first quarter of this year, reflecting lumpy repayments and a selective credit environment.
On the flip side, consumer loan growth remains resilient, though management is mindful of potential second-order effects.
Meanwhile, a firmer ringgit could exert a modest foreign-exchange translation drag on headline group loan growth.
“We correspondingly trim our 2025 loan growth assumption to 5% from 6%,” said UOBKH Research.
CIMB’s management views direct exposure to tariff impacts as “manageable, with trade-related loans making up less than 5% of group loans and clients with US export exposure comprising only 3% to 5% of group loans, the research house said.
On asset quality, CIMB’s management said it believes it’s still too early to assess the risks.
However, with a healthy loan-loss coverage ratio of 105%, versus a pre-Covid pandemic average of 80%, the group has flexibility to redeploy management overlays toward emerging risk areas, supporting a stable near-term credit cost outlook, the research house added.
Meanwhile, Maybank Investment Bank Research, which downgraded the stock to a “hold,” trimmed CIMB’s net profit forecasts for 2025 and 2026 by 4.3% and 4.9% , respectively, in light of lower growth estimates across the Asean region and expectations of interest rate cuts.
It also lowered the stock’s target price from RM9 to RM7.60.
Explaining its downgrade to “hold”, the research house said, with its Asean presence, CIMB is more exposed to volatility compared with its more domestic-centric peers.
“Our revised loan growth of 4.5% for this year is in comparison to management’s target of 5% to 7%, while we now expect a four basis points NIM compression this year versus management’s zero to five basis points. Our credit cost of 36 basis points is still within management’s 30 to 40 basis point range,” the research house said
The research house added that CIMB’s return on equity of 10.8% for this year (11.3% previously) is marginally below management’s target of 11% to 11.5%.
