KUALA LUMPUR: RHB Research has raised its FY22-FY24 earnings forecasts and target price on CIMB Group Holdings Bhd on higher income assumption following the release of better-than-expected earnings in the first half of 2021.
The research house said FY22-24 forecast earnings were raised 9%, 2% and 2% respectively while FY21 credit cost assumption was unchanged at 90bps.
It reiterated its “buy” call with a higher target price of RM5.70, which values CIMB at 0.9x FY22 forecast price-to-book value.
According to the research house, CIMB’s 1H21 Patami of RM3.54bil was ahead of its and consensus forecasts although management guided for a weaker 2H21 due to sequentially higher credit cost.
“Some guidance is revised to reflect the strong 1H21 performance but credit cost is still expected to reach 80-90bps,” said RHB.
CIMB’s management revised some of its FY21 guidance with ROE of 7-8% from 6-7%, loan growth of 2-3% from 4-5% and CIR of less than 50% from under 52%.
Net interest margin is still expected to see 10-20bps expansion even with modification losses taken into account.
Credit cost guidance was maintained at 80-90bps implying HoH higher provisions, mainly on building a buffer over weaker macro and higher percentage of loans on relief.
There will be RM50mil per quarter of accelerated amortisation of intangible assets until end-2022, the bank added.
“The group is likely to stick to the lower end of its dividend payout target in the near-term,” said RHB.