PETALING JAYA: CIMB Group Holdings Bhd
is considering pulling its Indonesian banking subsidiary, Bank CIMB Niaga Tbk PT, off the Indonesia Stock Exchange (IDX), as beaten-down valuations and mounting regulatory pressures raise questions over the merits of maintaining its listing.
The Malaysian banking giant is evaluating the potential privatisation of its 92.46%-owned subsidiary amid challenges in meeting Indonesia’s minimum public shareholding requirements, compounded by the risk of MSCI downgrading Indonesia from “emerging market” to “standalone market” status.
CIMB Niaga is Indonesia’s sixth largest bank by assets.
According to analysts, several strategic options on CIMB Niaga’s public shareholding spread requirements were discussed at CIMB’s third quarter of financial year 2026 (3Q26) pre-close conference call on Tuesday, led by its chief financial officer Khairul Rifaie.
For context, the IDX and the Financial Services Authority revised free-float regulations, lifting the minimum public shareholding requirement to 15% for listed entities from 7.5% earlier, with effect from March 2026.
BIMB Research in a report said CIMB Niaga previously planned to meet Indonesia’s minimum free float requirements by increasing its public shareholding from 7.54% to 12.5% by March 2027 and further to 15% by March 2028.
However, the potential reclassification of the Indonesian equity market by MSCI could make it more challenging to achieve these free float targets within the prescribed timeframe, it added.
In a note to clients, CIMB Research said three options remain under consideration to address CIMB Niaga’s free-float requirements, namely, a placement to strategic investors at acceptable valuations, a re-initial public offering (re-IPO), which appears unlikely under current market conditions, and privatisation, which is currently the more strategic and credible option.
CIMB is stepping up its efforts to pursue a potential delisting and plans to engage regulators.
CIMB, however, remains positive on the long-term prospects of its Indonesian franchise. Given CIMB Niaga’s current depressed market valuations, UOB Kay Hian (UOBKH) Research said a public equity fundraising or secondary offering is increasingly unlikely.
Instead, capturing value over a longer investment horizon remains the priority to shareholders.
This includes mechanisms to roll over or maintain select long-term minority institutional shareholders within the private entity, subject to ongoing regulatory discussions and clearances, said the brokerage.
In a recent report, Hong Leong Investment Bank (HLIB) Research sees strategic merits on CIMB Niaga’s potential privatisation as “this could streamline the ownership structure and provide greater flexibility in executing CIMB’s longer-term Indonesia strategy.”
A simplistic buyout of minorities at prevailing prices was estimated during the call at about RM800mil, although management stressed that privatisation does not necessarily entail buying out all minorities.
AmInvestment Bank Research also sees merit in a potential privatisation, estimating that buying out the remaining 7.5% minority stake in CIMB Niaga would cost only about RM600mil to RM700mil, an amount well within CIMB’s financial capacity.
The research house pointed out that CIMB has approximately RM850mil in excess capital from the disposal of its Thai auto financing business, although this was lower than the RM1.3bil previously estimated.
While near-term headwinds have prompted CIMB to reallocate capital away from Indonesia, AmInvestment Bank Research said the group remains bullish on the country’s long-term prospects.
It also noted that there are currently no indications that Indonesian regulators would restrict CIMB Niaga’s dividend payments to stem foreign exchange outflows.
Meanwhile, CIMB Niaga is slated to release its 3Q26 results on Oct 28, followed by the CIMB Group’s earnings announcement on Nov 25.
At the recent conference call, CIMB said overall, the group’s FY26 return on equity (ROE) target of 11% to 11.5% remains intact supported by stronger earnings contributions from its Singapore operations and an improved performance in Thailand following the disposal of its loss-making auto finance business.
Other key highlights during the call included the impact of mark-to-market and unrealised trading losses arising from rising bond yields, the net interest margin (NIM) and liquidity outlook, and capital-return options for shareholders.
The impact of higher Malaysian Government Securities yields on fair value through other comprehensive income losses in 3Q26, which in turn affects shareholders’ funds and CIMB Group’s Common Equity Tier 1 ratio, is expected to remain manageable due to the mitigating effect of hedging strategies.
BIMB Research said “We do not expect a repeat of the sizeable non-retail loan recoveries recorded in 1H26, nor any material changes in management overlays during 2H26. While some provision adjustments may arise from revisions to macroeconomic variables, he impact is likely to be modest.”
To factor in lower NIM assumptions, BIMB Research has adjusted downwards CIMB’s net profit forecasts for FY26, FY27 and FY28 to 2%, 4.4% and 2.4% respectively. It revised the stock fair value to RM8.30 from RM8.75 previously.
TA Research in a note to clients said it expects CIMB to report slightly softer earnings in 3Q26, after a relatively resilient 2Q26.
“While business momentum remains encouraging, we believe earnings could come under some pressure from further NIM compression, softer trading income and the absence of some one-off income recorded in the previous quarter,” it added.
HLIB Research maintained a “hold” call on CIMB with a lower target price of RM7.80, while both UOBKH Research and MBSB Research have “buy” calls, but at lower target prices of RM8.80 and RM8.35 per share.
TA Research has also lowered its target price for CIMB to RM7.42 from RM8.14, while maintaining a “hold” call.
AmInvestment Bank Research has maintained its “buy” call on CIMB, with a target price of RM9.80 per share.
“The market has been too quick to turn bearish on CIMB amid concerns over Indonesia and the recent spike in bond yields,” stated the research house.
