Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
HwangDBS Vickers Research has forecast the earnings of CIMB Group Holdings next year to decline by nine per cent, led by a 13 per cent drop in non-interest income due the softer capital market.
HwangDBS Vickers said in volatile times, market-related revenue would be most at risk, impacting CIMB as 40 per cent of the bank's non-interest income is market-related, mainly to capital market flows.
"This prompted us to trim non-interest income by 28-34 per cent over the financial year 2012-2013 forecast," it said in a research note today.
The research house also reduced loans growth assumptions to 12 per cent from 17 per cent and trimmed CIMB's net interest margin prediction to 2.6/2.5 per cent from 2.7/2.6 per cent over the same period.
"This is given the persistent competition and a less aggressive loans growth agenda for CIMB Niaga TBK PT, leading to a 23-27 per cent earnings cut," it added.
CIMB Niaga is the bank's Indonesian subsidiary.
HwangDBS Vickers said the bank could face another earnings reduction by 10-13 per cent if Indonesia implements a new policy in the banking sector, leading to a 50 per cent loss in contribution from the country.
Therefore, HwangDBS Vickers has revised downward, CIMB Group Holdings recommendation to a "hold" from "buy" and has downgraded its target price to RM7.40 from RM10.10. -- BERNAMA
Company Name: CIMB GROUP HOLDINGS BERHAD
| Research House: DBS VICKERS | Price Call: HOLD | Target Price: 7.40 |
HwangDBS Vickers Research has forecast the earnings of CIMB Group Holdings next year to decline by nine per cent, led by a 13 per cent drop in non-interest income due the softer capital market.
HwangDBS Vickers said in volatile times, market-related revenue would be most at risk, impacting CIMB as 40 per cent of the bank's non-interest income is market-related, mainly to capital market flows.
"This prompted us to trim non-interest income by 28-34 per cent over the financial year 2012-2013 forecast," it said in a research note today.
The research house also reduced loans growth assumptions to 12 per cent from 17 per cent and trimmed CIMB's net interest margin prediction to 2.6/2.5 per cent from 2.7/2.6 per cent over the same period.
"This is given the persistent competition and a less aggressive loans growth agenda for CIMB Niaga TBK PT, leading to a 23-27 per cent earnings cut," it added.
CIMB Niaga is the bank's Indonesian subsidiary.
HwangDBS Vickers said the bank could face another earnings reduction by 10-13 per cent if Indonesia implements a new policy in the banking sector, leading to a 50 per cent loss in contribution from the country.
Therefore, HwangDBS Vickers has revised downward, CIMB Group Holdings recommendation to a "hold" from "buy" and has downgraded its target price to RM7.40 from RM10.10. -- BERNAMA
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