Tuesday, November 23, 2010

HDSVR maintains Buy on CIMB, TP RM10.10

KUALA LUMPUR:'' Hwang DBS Vickers Research is maintaining a Buy on CIMB Group after'' the banking group's 3Q10 net profit of RM916 million brought 9M10 earnings to RM2.6 billion, which was within expectations.

The research house said on Tuesday, Nov 23 that 3Q10 earnings were driven by lower loan provisions despite extra provisions set aside for its SME portfolio.

Profit across segments fell on-quarter except for Treasury and Investments, and CIMB Thai. Asset quality continued to improve with gross non-performing loans ratio falling to 6.6% from 7.2% a quarter ago. Net interet margins slipped 11bps to 2.71% largely due to lower yields in other assets (not loans). Loans only grew 1% on-quarter following a drop in corporate loans (bridging loans).

Meanwhile, low-cost deposits grew 6% on-quarter, but 9% YTD growth still fell short of the bank's 18% target for the year. CIMB adopted Basel II this quarter, which caused Tier-1 CAR and RWCAR to rise to 15.0% each at bank level. CIMB declared a special 13.45 sen DPS (ex-date: 3 Dec 10; payment before Dec 31, 2010).

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