CIMB Group Holdings Bhd
BUY. TARGET PRICE: RM8.00
demand has generally been positive across the segments. That said, CIMB continues to stay disciplined on loan pricing and has walked away from deals due to pricing being too fine, especially in the corporate segment. That said, the bank thinks themes such as data centres, renewable energy, and roll-out of initiatives under the various masterplans should be positive for loan demand ahead. For now, it kept its 2024 group loan growth of 5-7%. CIMB also flagged out the importance of preserving its client franchise. While it may forego lending to preserve NIM, it remains focused on the other relationship aspects such as CASA, treasury markets, FX, etc. For retail, its mortgage acceptance rate had dropped by 10-15% post a 20bps upward adjustment to loan pricing. CIMB is keeping an eye out on this, and may need to step back in the market.
Earlier efforts to lower deposit cost should continue to be positive for Q2 NIM, although tailwinds could ebb beyond that. Deposit competition has been stable, but it also means that there may not be too much room for further deposit rate cuts ahead. 2024 NIM guidance is flat to a +5bps rise.
Delinquency trends for retail in Malaysia and Indonesia have been stable to slightly better. While CIMB had earlier seen some signs of pressure for local SMEs, this had eased off in Q2. For the corporate portfolio, management has not noted any major names going through stress or potential downgrades. In Thailand, however, delinquencies for its consumer finance business remains elevated but is improving. Despite a fairly benign landscape, CIMB is looking to keep its 30-40bps credit cost guidance to ensure adequate coverage for its portfolio.
Keep BUY, new RM8 TP. –