BIMB (5258) - BIMB Holdings - Entering slower financing growth phase
During its briefing today, BIMB’s management guided for slower financing (loan) growth of 15% in 2015, compared to 21-37% in 2012-14. However, this is still significantly higher than the projected 8.5-9.5% for the industry. We are more optimistic on BIMB’s loan growth, with a forecast of 16.8% in 2015. The management also conceded that margins are still under pressure and it expects net interest margin to decline from around 3% in 2014 to circa 2.85% in 2015. Our DDM-based target price (COE of 13.5%; LT growth of 4%) is intact. Despite the above-industry loan growth, we still rate BIMB a Hold due to the concerns about margin compression and weak fee income growth. We prefer RHBCap.
What Happened
During its 4QFY14 analyst briefing today, BIMB group’s CEO Dato’ Sri Zukri Samat conducted a presentation for 25-30 fund managers and analysts. The key highlights were the group’s strategic thrusts and guidance for 2015, including 1) financing growth of 15%, 2) deposit growth of 10%, 3) total asset growth of 10%, 4) lower net interest margin of circa 2.85%, and 5) gross impaired loan ratio of less than 1.5%.
What We Think
We think that a slowdown in 2015 financing growth is imminent in view of the industry trend and larger base. However, management’s loan growth guidance of 15% in 2015 is still significantly higher than the projected growth of 8.5-9.5% for the industry. Our worry is that the positive impact of healthy financing growth could be dampened by margin compression. For this reason, BIMB’s net financing income only grew by 9.1% in 2014 against a spectacular financing expansion of 24.5%. Despite the expected additional income from the management of investment accounts in 2H15, we think that the growth in non-fund based income will remain weak in 2015. This is because of the new ruling on payment cards, which reduces the limit that banks can charge for credit/debit cards.
What You Should Do
We advise investors to stay on the sidelines, as the positive impact of the above-industry financing growth in 2015 would be diluted by margin compression and weak fee income growth.
Source: CIMB Daybreak - 25 March 2015
BIMB 回教银行 5258 BIMB HOLDINGS BHD
Target RM4.25 (Stock Rating: HOLD)
During its briefing today, BIMB’s management guided for slower financing (loan) growth of 15% in 2015, compared to 21-37% in 2012-14. However, this is still significantly higher than the projected 8.5-9.5% for the industry. We are more optimistic on BIMB’s loan growth, with a forecast of 16.8% in 2015. The management also conceded that margins are still under pressure and it expects net interest margin to decline from around 3% in 2014 to circa 2.85% in 2015. Our DDM-based target price (COE of 13.5%; LT growth of 4%) is intact. Despite the above-industry loan growth, we still rate BIMB a Hold due to the concerns about margin compression and weak fee income growth. We prefer RHBCap.
What Happened
During its 4QFY14 analyst briefing today, BIMB group’s CEO Dato’ Sri Zukri Samat conducted a presentation for 25-30 fund managers and analysts. The key highlights were the group’s strategic thrusts and guidance for 2015, including 1) financing growth of 15%, 2) deposit growth of 10%, 3) total asset growth of 10%, 4) lower net interest margin of circa 2.85%, and 5) gross impaired loan ratio of less than 1.5%.
What We Think
We think that a slowdown in 2015 financing growth is imminent in view of the industry trend and larger base. However, management’s loan growth guidance of 15% in 2015 is still significantly higher than the projected growth of 8.5-9.5% for the industry. Our worry is that the positive impact of healthy financing growth could be dampened by margin compression. For this reason, BIMB’s net financing income only grew by 9.1% in 2014 against a spectacular financing expansion of 24.5%. Despite the expected additional income from the management of investment accounts in 2H15, we think that the growth in non-fund based income will remain weak in 2015. This is because of the new ruling on payment cards, which reduces the limit that banks can charge for credit/debit cards.
What You Should Do
We advise investors to stay on the sidelines, as the positive impact of the above-industry financing growth in 2015 would be diluted by margin compression and weak fee income growth.
Source: CIMB Daybreak - 25 March 2015
