KUCHING:
CIMB Bank Bhd (CIMB) first quarter of
2012 (1Q12) revenues were driven higher from non-interest income from debt
capital markets but with lower provisions as expenses inched up led by
personnel and establishment costs.
Based
on research reports by Hwang DBS Vickers Research Sdn Bhd (HDBS Vickers), and
the research wing of Kenanga Investment Bank Bhd (Kenanga Research), the
research houses concurred that net interest margins (NIM) fell marginally, but
loan growth was flat quarter on quarter (q-o-q) against moderate growth
expectations.
HDBS
Vickers understood there would have been a slight uptick in loan growth if not
for accelerated write-offs, repayments (largely business loans), and conversion
of some corporate loans to bonds.
While
Kenanga Research noted that robust contribution from wholesale banking’s profit
before tax (PBT) of RM641 million was up from 4Q11 RM599 million.
Together
with Investment’s PBT of RM170 million, total PBT contributed by these two
segments was higher by 25 per cent q-o-q.CIMB Niaga meanwhile contributed RM315
million to the group PBT, making up a 32 per cent share.
Kenanga
Research also mentioned that net impaired ratio was at a historical low of 0.9
per cent with a 81 per cent allowance coverage, and the annualised credit
charge 30 basis points (bps) was within the research house’s target.
Although
capital ratios fell due to Bank Negara Malaysia’s ruling requiring higher risk
weights for loans committed but not drawn, HDBS Vickers remained positive as
CIMB maintained it was prepared to adopt Basel III when due.
In the
extreme case, CIMB could sell certain non-core assets to raise capital rather
than issue equity.
The
research house opined that though bond market deals boosted fee income in the
1Q12, in the next few quarters, fee income would be dominated by equities,
premised on several major IPOs in the pipeline.
Forex
income should remain strong on sustainable customer flow.
Kenanga
Research were positive on the group’s recent acquisition strategies and believe
that CIMB was poised for a rerating as the group was now of the biggest proxies
to ride the Asean region resurgence if economic growth in the region remains
resilient over the next two to three years.
The
acquisitions were earning accretive over the medium to long term.
This
would give CIMB a full Asean banking coverage.
Together
with the Royal Bank of Scotland’s investment banking asset acquisition, the
group was positioning itself for the next Asia’s recovery cycle in the research
house’s view.
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