In a statement, Hong Leong Investment Bank Bhd (HLIB) stated that the potentially quicker credit growth could help optimise the fixed deposit rate and widen the NFM.
BIMB’s management shared that its corporate lending pipeline is robust and should trickle through in the second half of 2024 (H2 2024) while the retail segment is seen to regain steam on seasonally stronger demand.
“Separately, net credit cost (NCC) is anticipated to be stable at current levels given steady asset quality.
“In any case, we are generally reassured by the bank’s financing loss coverage of over 100% as this provides the buffer to pad any potential deterioration in asset quality,” it said.
Therefore, HLIB has upgraded BIMB to a “buy” call with a higher target price (TP) of RM3.10 per share.
Its earnings forecast for BIMB is unchanged since its second-quarter 2024 results were broadly in line.
In a filing with Bursa Malaysia yesterday, Bank Islam posted a slightly higher net profit of RM137.16 million in the second quarter ended June 30, 2024 (Q2 2024) compared to RM136.13 million a year ago.
Revenue in the quarter increased to RM1.14 billion against RM1.12 billion previously.
Meanwhile, Maybank Investment Bank Bhd (Maybank IB) has lowered BIMB’s earnings estimate for the financial years 2024-2026 (FY2024-2026E) by 5% respectively as the bank’s Q2 2024 results were below expectations.
“We maintain a ‘hold’ call and roll forward valuations to FY2025 on an unchanged price to book value (PBV) of 0.8 times (FY2025E return on equity (ROE): 7.9%). Our TP of RM2.75 per share is maintained,” it said.
MIDF Amanah Investment Bank Bhd has maintained its forecast as BIMB is subject to seasonal effects, and usually reports stronger earnings in H2, although the first half of 2024 (H1 2024)’s earnings came in on the weaker side.
“We maintain a ‘buy’ call with a revised TP of RM3.06 per share.
“We revise our valuation upward as benefits from civil servant rate hike, increased development outside the Klang Valley, GEAR-uP programme, and revamp of its brick-and-mortar outlets should benefit investor sentiment.
With an ROE level of 7%-8%, MIDF said BIMB qualifies as a comparatively lower ROE bank.
“We feel that its inability to hit former pre-pandemic ROE levels does not necessarily prevent its valuations from reaching former highs,” it said.
At 12.30pm, BIMB’s share price decreased 9 sen or 3.28% to RM2.65, with 1.89 million shares traded.