Hong Leong Investment Bank cut its forecasts for CIMB Group's financial years 2011-2013 by 5.2-5.6 per cent due to lower-than-expected loan growth, non-interest income and net interest margin.
The bank said the second quarter FY11 net profit of RM970 million took first half FY11 net profit to RM1.886 billion, or only 44.1 per cent of HLIB's and 45.1 per cent of consensus forecasts.
It said non-interest income may fall short if the capital markets were to soften and this would result in unexpected jump in impaired loans, lower-than-expected loan growth and impact on non-interest income.
HLIB said it would maintain its 'buy' call on CIMB, backed by the potential returns which were expected to stay above 10 per cent.
However, it has cut the target price to RM9 from RM9.58.
MIDF Research said CIMB's loan growth decelerated in the first half FY11 as gross loans increased by only 11 per cent year-on-year at the end of June from 13.8 per cent at the end of first quarter FY11.
It stated that CIMB's loan base has expanded to RM176 billion, driven by 25.9 per cent growth at CIMB Niaga, 13.7 per cent growth of Malaysian consumer loans, and 8.8 per cent growth in CIMB Thailand. However, It added that corporate loans declined by 5.3 per cent.
MIDF said it would maintain its 'buy' call on CIMB with the target price cut to RM9 from RM9.60.
The full story is available at Bernama.
Do you know more about this story? Contact us anonymously through this link.