Alliance Research maintains Neutral on CIMB, target price RM7.81

Business & Markets 2013
Written by theedgemalaysia.com
Tuesday, 30 April 2013 08:06
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KUALA LUMPUR (April 30): Alliance Research maintains Neutral on
CIMB, target price RM7.81 after CIMB Niaga (CIMBN)’s 1QFY13 net
profit increased by 12.5% year-on-year (y-o-y) to Rp 1.1 trillion, mainly
supported by lower loan loss provisions (-33% y-o-y).
In a note April 29, Alliance Research vice president for equity Cheah
King Yoon said CIMBN’s pre provisional operating profit only edged up
by 1.0% y-o-y, dragged by 1) temporarily weakening of NIM due to
lower loan-deposit ratio (LDR) and 2) -14% y-o-y reduction in
non-interest income in the absence of high bond gains recorded in 1Q12
and lower treasury income.
Cheah said although 1Q loan grew by 13.0% y-o-y, it only inched up by
1.0% q-o-q, mainly dragged by large repayment of corporate loans
during the quarter where the bank’s corporate loans only grew by 3%
y-o-y and contracted by -3% q-o-q.
“On a positive note, 1Q consumer loans sustained its growth rate at
14% y-o-y, showing a continued strong retail lending activities despite
the implementation of higher minimum down payment threshold on
mortgage and auto loans effective from 15th June 2012.
“Management expects the loan pipeline to be strong in 2QFY13
onwards and maintain their guidance of high to mid-teens loan growth
for FY13,” he said.