PETALING JAYA: CIMB Group Holdings Bhd
’s earnings prospects are likely to be clouded by net interest margin (NIM) pressure, particularly in Indonesia where liability repricing is outpacing asset yields, although several levers are expected to support margins and earnings in the second half of financial year 2026 (2H26).
Hong Leong Investment Bank (HLIB) Research said margins should stabilise in 2H26, anchored by Indonesian loan repricing, aggressive current account and savings account mobilisation, and a shift from costly wholesale funding towards retail deposits in Malaysia.
Asset quality should also remain robust despite the uptick in credit costs in the second quarter of 2026 (2Q26), which HLIB Research attributed to pre-emptive overlay adjustments and provisions related to Indonesia’s Otoritas Jasa Keuangan, rather than broad-based credit deterioration.
“With gross impaired loans at a record low, management overlays of about RM984mil as at end-financial year 2025 and full-year credit cost guidance maintained at 25 to 35 basis points, the credit risks remain well contained,” HLIB Research said in a report.
It said structural efficiency gains under the group’s Forward30 strategy and the roll-off of transformation costs will provide additional margin support.
“Crucially, portfolio rationalisation –highlighted by the CIMB Thai auto-book divestment – will release capital to high-yielding Asean segments, complementing the remaining RM1.3bil capital return commitment to lift long-term return on equity (ROE) and dividend prospects.”
CIMB reported 2Q26 core earnings of RM1.9bil, bringing 1H26 earnings to RM3.9bil, which were broadly within analysts’ expectations.
HLIB Research maintained its “buy” call on CIMB with an unchanged Gordon Growth Model-based target price of RM8.70.
Meanwhile, TA Research said CIMB’s management would continue reviewing underperforming businesses, segments and markets, with capital to be reallocated towards areas offering stronger, ROE-accretive growth.
At the same time, the research firm noted that CIMB is doubling down on its dual positioning as both a universal bank and a national e-wallet.
Recent initiatives include gold investment services on the Touch N Go (TNG) app, powered by CIMB, as well as small and medium enterprise working capital financing through BizCash, also offered via the TNG app.
In wealth management, CIMB introduced a new “Private Wealth” segment to serve customers between its existing Preferred and Private Banking tiers.
“Management highlighted ongoing initiatives that continue to deliver value through cost reductions, with operating expenses trending lower while allowing continued investment in technology and artificial intelligence.
“On capital, although the interim dividend per share was lower than last year, CIMB remains firmly committed to its RM2bil capital return plan, with RM1.3bil still to be delivered, supported by its strong capital position,” TA Research said in a report.
The research firm maintains its target price for CIMB at RM8.14, which implies a price-to-book value of about 1.05 times and incorporates a 3% environmental, social and governance premium.
However, with the risk-reward profile narrowing, it had downgraded its recommendation on the stock from “buy” to “hold”.
CIMB shares fell 15 sen, or 1.88%, to RM7.81 at the time of writing.
