Broker: Maybank Investment Bank Berhad
Date of Report: July 24, 2025
CIMB Group Holdings: Navigating 2Q25 with Stable Margins, Positive Asset Quality, and Optimized Dividends
Overview: CIMB Group’s 2Q25 Performance and Outlook
CIMB Group Holdings, one of Malaysia’s banking giants, is poised to deliver a decent performance for 2Q25. Despite a cautious stance on loan growth, the group benefits from stable net interest margins (NIMs), buoyant non-interest income (NOII), and robust asset quality. This analysis unpacks CIMB’s financial trajectory, strategic focus, and the critical metrics investors need to watch.
CIMB Group: Key Highlights for 2Q25
- Stable Margins: NIMs are expected to be stable quarter-on-quarter, with positive momentum in Malaysia and Singapore offsetting minor compression in Thailand and Indonesia.
- Asset Quality: Continues to hold steady, with credit cost likely to remain benign.
- Loan Growth: Cautious approach towards the corporate and commercial sectors due to competitive yields, with forecasted loan growth at 4.5%, slightly below management’s 5-7% target.
- Non-Interest Income: Higher trading and forex income expected to drive sequential NOII improvement.
- Optimized Payout Ratios: Ongoing efforts to increase dividend payouts across group entities, including a hike at CIMB Niaga.
Stock Performance and Valuation Metrics
- Share Price (as of report date): MYR 6.67
- 12-month Target Price: MYR 7.60 (+14%)
- 52-week High/Low: MYR 8.49 / MYR 6.35
- Market Capitalization: MYR 71.7 billion (USD 17.0 billion)
- Issued Shares: 10,750 million
- Free Float: 24.8%
- Major Shareholders:
- Khazanah Nasional Bhd. 21.5%
- Employees Provident Fund 17.3%
- Kumpulan Wang Persaraan 6.4%
Key Financial Indicators (MYR million, unless stated otherwise)
| FYE Dec |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Operating Income |
21,014 |
22,301 |
23,026 |
24,054 |
25,227 |
| Pre-Provision Profit |
11,149 |
11,881 |
12,150 |
12,695 |
13,355 |
| Core Net Profit |
6,981 |
7,728 |
7,708 |
8,058 |
8,723 |
| Core EPS (MYR) |
0.65 |
0.72 |
0.72 |
0.75 |
0.81 |
| Core EPS Growth (%) |
25.5 |
10.1 |
(0.3) |
4.5 |
8.3 |
| Net DPS (MYR) |
0.43 |
0.47 |
0.40 |
0.41 |
0.45 |
| Core P/E (x) |
8.9 |
11.4 |
9.3 |
8.9 |
8.2 |
| P/BV (x) |
0.9 |
1.3 |
1.0 |
0.9 |
0.9 |
| Net Dividend Yield (%) |
7.4 |
5.7 |
6.0 |
6.1 |
6.7 |
| Book Value (MYR) |
6.41 |
6.45 |
6.78 |
7.12 |
7.48 |
| ROAE (%) |
10.7 |
11.2 |
10.9 |
10.8 |
11.1 |
| ROAA (%) |
1.0 |
1.0 |
1.0 |
1.0 |
1.0 |
Loan Growth: Focused on Consumers and SMEs
- Consumer and SME Loans: Continued robust demand with stable momentum.
- Corporate/Business Lending: Management remains cautious due to competitive yields. The group’s official 5-7% loan growth target for FY25 is seen as stretched, with actual forecasts at 4.5%.
Net Interest Margin (NIM): Stability Amid Regional Dynamics
- Malaysia & Singapore: NIMs improved sequentially, supported by stable domestic rates and recent campaign rate cuts (10-20bps in May) to buffer against compression.
- Thailand: Temporary compression from one-off effective interest rate adjustments after a policy rate cut, expected to normalize in coming quarters.
- Indonesia: Sequential NIM contraction in 2Q25 but expected improvement as liquidity conditions recover.
- Forecast: FY25 NIM compression of 4bps is assumed, with management previously indicating potential stability to a 5bps decrease. The 25bps OPR cut on July 9, 2025, is expected to have a marginal impact (1-2bps) for the year.
Non-Interest Income (NOII): Sustained Trading and Forex Momentum
- Trading & Forex: Continued strong performance amid market volatility in 2Q25.
- Fees: Slight sequential dip anticipated, offset by lumpy income from other sources.
- Outlook: Fee and commission income is expected to strengthen in 2H25, driven by increased cross-sell and transaction activity, especially in wholesale banking.
Credit Cost and Asset Quality: Benign and Stable
- Asset Quality: No significant stress noted. The 25-35bps credit cost guidance for FY25 is maintained.
- Overlays: No major writebacks anticipated; overlays are likely to be reallocated to specific loans in the future.
- Forecast: A conservative credit cost of 36bps is assumed for FY25, higher than 1Q25’s 26bps, reflecting a cautious stance amid slower economic growth.
Dividend Payout Optimization: Group-Wide Push
- CIMB Niaga: Dividend payout ratio raised to 50% from 40%.
- Malaysia: The commercial bank is a major contributor to group dividends, with potential for higher payouts from the Islamic bank as well.
Comprehensive Financial Analysis: Growth, Profitability, Liquidity, and Capital
| Key Ratios |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Net Interest Income Growth (%) |
(4.7) |
2.5 |
(0.7) |
2.7 |
3.1 |
| Non-Interest Income Growth (%) |
34.8 |
9.3 |
6.8 |
4.8 |
5.4 |
| Operating Expenses Growth (%) |
5.6 |
5.6 |
4.4 |
4.4 |
4.5 |
| Pre-Provision Profit Growth (%) |
6.3 |
6.6 |
2.3 |
4.5 |
5.2 |
| Core Net Profit Growth (%) |
28.3 |
10.7 |
(0.3) |
4.5 |
8.3 |
| Gross Loans Growth (%) |
8.3 |
2.6 |
4.5 |
4.0 |
4.5 |
| Customer Deposits Growth (%) |
8.0 |
2.9 |
2.6 |
3.8 |
4.3 |
| Total Assets Growth (%) |
10.0 |
2.9 |
3.8 |
4.3 |
4.5 |
| Net NPL (%) |
1.2 |
0.8 |
1.0 |
1.0 |
1.0 |
| Gross NPL (%) |
2.7 |
2.1 |
2.3 |
2.1 |
2.1 |
| Loan Loss Coverage (%) |
97.0 |
105.3 |
107.2 |
112.1 |
112.1 |
| CET1 Ratio (%) |
14.5 |
14.9 |
15.2 |
15.5 |
15.7 |
| Tier 1 Capital (%) |
15.1 |
15.5 |
15.8 |
16.0 |
16.2 |
| Risk-Weighted Capital (%) |
18.2 |
18.6 |
18.7 |
18.9 |
19.0 |
Risk Factors: Regional Volatility Remains a Key Consideration
- Malaysia: As the country’s second-largest financial institution by assets, any domestic economic slowdown could impact operations.
- Regional Exposure: Operations in Indonesia, Thailand, and Singapore mean regional economic volatility, liquidity tightening, and currency shifts (notably IDR) could affect results.
Conclusion: A Cautious but Stable Outlook for CIMB Group
CIMB Group Holdings is positioned for a stable 2Q25, underpinned by strong consumer and SME lending, resilient NIMs, and improved non-interest income. While management maintains a cautious stance on corporate lending and expects modest loan growth, the Group’s robust asset quality, prudent credit cost management, and focus on optimizing dividend payouts enhance its overall investment appeal. The stock is rated as HOLD, with a 12-month target price of MYR 7.60, representing a 14% upside from current levels.
About CIMB Group Holdings
CIMB Group Holdings offers a full suite of consumer and investment banking services and holds a majority stake in PT CIMB Niaga, reinforcing its regional presence and diversification strategy.
Contact Information
For further details, reach out to Maybank Investment Bank Berhad or visit their regional offices in Malaysia, Singapore, London, Hong Kong, Indonesia, India, Philippines, Thailand, and Vietnam.
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