Share Price: RM7.80 | Target Price: RM9.00 | Rating: Buy
The CIMB Group’s “Forward30” Strategy has set these key financial metrics/KPIs to be achieved by 2030: i) ROE of 12-13% (by 2027) and Top Quartile of the ASEAN peers (by 2030) vs. 11.2% (2024); ii) CASA ratio – 45% (2024: 43.1%); iii) NOII ratio – 33-34% (2024: 31%); iv) CIR – low 40% (2024: 46.7%); v) Net Credit Cost – 40 50bps (2024: 25bps); vi) CET1 – 13-14% (2024: vs. 14.6%); and vii) Net Promoter Score (NPS) of Top 3. Based on Exhibit 1, by way of CIMB achieving a higher CASA ratio of 45%, it is likely to be able to lower its COF by 10-20bps and will be one of the NIM drivers. Meanwhile, the Group also aims to raise its client franchise income to 75% of NOII from 65% today based on the cross-selling initiatives planned for Wholesale Banking and Wealth Management. Ultimately, having an ROE target of 12-13% implies a net profit level of RM9.3-10.1bn, which is above consensus’ earnings of ~RM9.3bn for 2027E (at ROE of 12%). Nonetheless, we note that operating in markets such as Indonesia also increases the overall risk to the group, of which will also be accompanied by a higher level of net credit cost, as CIMB had also guided on an increased level of 40-50bps (at Group level) by 2030.
CIMB Results Update for Q4 Ending 31/12/24
Research House: Affin Hwang Investment Bank (AHIB)
Analyst: Tan Ei Leen
FY2025 Forecast: Net Profit: RM8,097m | EPS: RM0.755 | DPS: RM0.492