Bank Islam upgraded to ‘Buy’, balance sheet growth remains underwhelming

BANK ISLAM Malaysia Bhd has been upgraded to ‘Buy’ from ‘ Hold’ at MIDF Research to reflect altered earnings prospects and ROE-based valuations.

In a note released today, the research house said Bank Islam’s balance sheet growth has remained underwhelming for several quarters.

It has a 52-week target price of RM2.88, up from RM2.68. The counter was down 3 sen to RM2.50 at 11.30am today. Its 52-week high/low was RM2.63/RM1.70.

Bank Islam has two ‘Buy’, five ‘Hold’ and one ‘Sell’ calls among analysts tracked by Bloomberg, with a consensus target price of RM2.55.

Bank Islam posted a net profit of RM129.2 million for the first quarter ended March 31, 2024 (1Q24), up 9.4% from the same period last year, on revenue of RM1.144 billion. The net profit increase was primarily driven by higher net income and lower net allowance for impairment on financing.

The group’s increase in net income was mainly due to the rise in net fund-based income, which improved by 5.4% to RM528.9 million, driven by year-on-year (y-o-y) growth in financing and investment securities, it said in a statement.

As of 31 March 2024, the Group’s total assets stood at RM91.0 billion, spurred by the growth in financing and investment securities, offset by the reduction in cash and short term funds. Net assets per share amounted to RM3.29. — TMR