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

Stock Overview

• Current Share Price: MYR 8.16
• Market Capitalization: MYR 87,402 million
• Target Price: MYR 9.20
• Potential Upside: 13%

Valuation Metrics

• Price-to-Earnings Ratio (PER):
  • CY24E: 11.3x
  • CY25E: 10.6x
• Price-to-Book (P/B):
  • CY24E: 1.2x
  • CY25E: 1.2x
• Return on Average Equity (ROAE):
  • CY24E: 11.1%
  • CY25E: 11.2%
• Net Yield:
  • CY24E: 5.7%
  • CY25E: 5.1%

Net Interest Margin (NIM) Performance

CIMB’s NIM for FY23 was 2.22%, and the bank has been guiding for NIMs in FY24 to be within the range of 2.22%-2.27%. Maybank IBG’s forecast aligns with this guidance, estimating CIMB’s NIM at 2.22% for FY24E and 2.26% for FY25E. This indicates a stable margin outlook for the coming years, providing CIMB with a solid foundation for steady profitability.

Liquidity and Funding

CIMB benefits from improving liquidity conditions in the banking system, which should help maintain funding costs and support its NIM stability. The easing of KLIBOR rates and stable liquidity positions across the sector will likely contribute to CIMB’s favorable funding outlook.

Earnings Growth Potential

CIMB is expected to see a 5.8% increase in net profit in FY25E if NIMs return to pre-pandemic levels. This would lead to an upgrade in the bank’s return on equity (ROE) from 11.2% to 11.9%. Given the bank’s robust fundamentals, CIMB is positioned for steady earnings growth over the next few years.

Risks and Challenges

CIMB faces challenges from intense competition in the Malaysian banking sector, particularly in mortgage lending. Additionally, while NIMs are stable, the bank has limited room for significant margin expansion, which could limit upside potential compared to some of its peers.

This information has been extracted from the Maybank Investment Bank Berhad report dated September 17, 2024.