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

Stock Overview

• Current Share Price: MYR 2.63
• Market Capitalization: MYR 5,961 million
• Target Price: MYR 2.75
• Potential Upside: 5%

Valuation Metrics

• Price-to-Earnings Ratio (PER):
  • CY24E: 10.5x
  • CY25E: 9.8x
• Price-to-Book (P/B):
  • CY24E: 0.8x
  • CY25E: 0.8x
• Return on Average Equity (ROAE):
  • CY24E: 7.6%
  • CY25E: 7.9%
• Net Yield:
  • CY24E: 6.2%
  • CY25E: 6.6%

Net Interest Margin (NIM) Outlook

BIMB (Bank Islam Malaysia Berhad) recorded a NIM of 2.12% in FY23, with expectations for a slight recovery in FY24E. The bank is guiding for its NIM to exceed 2.10%, while Maybank IBG projects BIMB’s NIM at 2.20% for FY24E and 2.23% for FY25E. This recovery is significant, as the bank could see one of the largest potential earnings upgrades among its peers if NIMs return to pre-pandemic levels.

Earnings and Profitability

BIMB is forecasted to see a 14% increase in earnings if NIMs recover to pre-pandemic levels, with a potential boost in net profit from MYR 607 million to MYR 692 million by FY25E. The bank’s ROAE is also expected to improve, from 7.9% in CY24E to 9.0% in FY25E, showcasing the potential for strong earnings growth in the coming years.

Liquidity and Funding

BIMB’s liquidity position has been improving, with positive momentum in the Malaysian banking sector aiding funding stability. This improved liquidity should support the bank’s efforts to maintain its NIM and profitability in a competitive market environment.

Dividend Yield and Growth Potential

With a net yield of 6.2% in CY24E, rising to 6.6% in CY25E, BIMB offers attractive dividend returns for investors. The combination of stable dividend payouts and the potential for earnings growth driven by NIM recovery positions the bank as a strong player in the financial sector, offering both income and capital appreciation opportunities.

Risks and Challenges

BIMB faces challenges from intense competition in the banking sector, particularly in deposit gathering and lending activities. However, its strong potential for NIM recovery and attractive dividend yield mitigate these risks, making it a favorable option for investors seeking growth and income.

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