Date: September 17, 2024
Broker: Maybank Investment Bank Berhad

Stock Performance Overview

• Share Price (MYR): 8.16
• Market Cap (MYR Million): 87,402
• Target Price (MYR): 9.20
• Upside Potential: 13%

Valuation Metrics

• PER (x) CY24E: 11.3
• PER (x) CY25E: 10.6
• P/B (x) CY24E: 1.2
• P/B (x) CY25E: 1.2
• ROAE (%) CY24E: 11.1
• ROAE (%) CY25E: 11.2
• Net Yield (%) CY24E: 5.7
• Net Yield (%) CY25E: 5.1

Sector Outlook

CIMB is expected to benefit from improving liquidity in the Malaysian banking sector. The easing of net interest margin (NIM) pressure is expected to contribute to positive earnings for CIMB, driven by favorable conditions in the system liquidity indicators such as CASA deposits and KLIBOR rates.

NIM Trends

CIMB’s NIMs have seen fluctuations but are expected to stabilize in 2024 and 2025. The bank’s projected NIMs for FY25E stand at 2.26%, reflecting a slight recovery from the 2023 levels, aligning with sector-wide expectations of stable NIMs.

Earnings Revisions Potential

CIMB has the potential for earnings upgrades if NIMs return to pre-pandemic levels. The variance between its forecasted FY25E NIM of 2.26% and pre-pandemic levels is 9 basis points, indicating room for earnings growth. Hypothetically, if NIMs fully recover, CIMB’s FY25E net profit could increase by 5.8%, with a corresponding ROE improvement to 11.9%.

Dividend Yield

CIMB offers attractive dividend yields, with a projected net yield of 5.7% for CY24E and 5.1% for CY25E. This makes CIMB an appealing choice for income-focused investors, especially given the potential for NIM recovery and earnings upgrades.

Growth Potential and Earnings Stability

CIMB is positioned for growth with a target price of MYR 9.20, representing a 13% upside potential. Its strong balance sheet, coupled with the easing of competitive pressures on lending and deposit rates, is expected to support stable earnings growth in the coming years.

Key Risks

While the outlook is positive, CIMB faces potential risks, including heightened competition in the banking sector, a slower-than-expected recovery in NIMs, and macroeconomic uncertainties. Nonetheless, CIMB’s robust fundamentals and projected earnings upgrades position it favorably in the sector.