Robust earnings momentum for CIMB, says OSK Research

SOLID BOTTOMLINE: The front view of Genting Highlands Hotel which houses Malaysia’s sole casino operations.OSK Research says Genting’s earnings have stayed strong despite the economic downturn.

KUCHING: CIMB Holdings Bhd (CIMB) is set towards gaining stronger momentum going forward, underlined by its strong investment banking and bond origination deal pipeline, earnings growth traction from its Indonesian consumer banking division as well as improved loan loss provisioning on the back of a moderate trend in domestic non-performing loan (NPL) area.

Research house OSK Research Sdn Bhd noted that the banking group is slated towards achieving its targeted return-on-equities (ROEs) of 14 to 15 per cent for the year, making it the likeliest candidate to benefit from a more stable market environment.

In a recent research note, it added that CIMB’s established investment banking franchise will mark it as the key driver to boost capital market activities as corporates have begun toaggressively seek mergersand- acquisitions prospects, as well as equity and debtcapital raising exercises.

On its Indonesian operation PT Bank CIMB Niaga Tbk (CIMB Niaga), the research house maintained its optimism towards the subsidiary’s outlook.

Despite having shown a lacklustre loan growth of 3.3 per cent over the year’s first nine-month, CIMB Niaga reported a healthy growth of 31 per cent in net interest income driven by a surge in net interest margins (NIMs).

Following the recent completion of the group’s integration process, OSK Research believed that CIMB Niaga has the potential to exhibit stronger loans growth throughout the remainder of the year.

This, alongside NIMs in excess of 6.5 per cent, should strengthen CIMB Niaga’s position in generating robust growth in its net interest income going forward.

Additionally, the Indonesian consumer banking arm has already demonstrated tremendous results in its superior foreign-exchange and treasury income growth, both of which helped fuel a 70 per cent growth in noninterest income on a yearover- year basis.

In essence, OSK Research viewed CIMB Niaga’s encouraging performance reflected CIMB’s regionalisation drive to enhance cross-border valueaddition, both in terms of revenues and costs.

Over the longer term, OSK Research expressed its confidence that CIMB’s efforts to grow into an established full-fledged regional banking franchise, along with its wide distribution network should create multiple opportunities for the group especially towards enlarging its corporate and multinational customer base.

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