CIMB’s 2Q results to remain within expectations, say analysts

No major positive surprises expected for 2Q17 results, slated for release today


CIMB Group Holdings Bhd’s earnings performance forthe second-quarter ended June 30, 2017 (2Q17), is likely to fall within expectations of analysts.

RHB Research Institute Sdn Bhd said in a research report that it does not expect any no major positive surprises for the banking group’s 2Q17 results, which are slated for release today.

Top line growth is likely to moderate due to a slowdown in business activities during the fasting month, while net profit will stand at around RM1 billion on higher impairment charges, the research house said.

Kenanga Investment Bank Bhd maintained its expectations for CIMB’s financial year ending Dec 31, 2017, due to the lack of any new catalysts on the horizon.

CIMB recorded a 45% jump in net profit for 1Q17 to RM1.18 billion versus RM813.8 million last year, buoyed by higher interest and non-interest income, less provision for impaired loans and lower cost-to income ratio.

The group’s 1Q17 revenue increased 17% to RM4.36 billion compared to RM3.73 billion previously, largely driven by a 32.3% increase in non-interest income asactivities in the capital market improved during the period.

AllianceDBS Research Sdn Bhd said in a recent report that CIMB’s share price has appreciated significantly during the first-half of the year (1H17).

The research house said this could have been due to market overoptimism on recovery in the group’s Indonesian operations, which it believes could remain a slight drag on group performance this year.

An analyst with MIDF Amanah Investment Bank Bhd said the largely positive performances of banks du-
ring 1Q17 are likely to be sustainable, given the uptick in the country’s economy.

“Since the economy is expected to do well this year compared to last year, banks should be a beneficiary of that,” the analyst told The Malaysian Reserve.

Malaysia recorded gross domestic product (GDP) growth of 5.8% year-on-year during 2Q17, its fastest pace in over two years, spurred by strong private sector spending and robust export growth.

The unexpectedly high growth, which came on the back of a 5.6% expansion in 1Q17, led Bank Negara Malaysia to state that it will be revising its GDP target for the full year to above 4.8%.