RHB Research downgrades CIMB to Sell from Neutral. (The Star) KUALA LUMPUR: RHB Research has downgraded CIMB to Sell from Neutral with a target price of RM5.20 after it lowered its 2014-2016 net profit forecasts by 6.5-7.5%, as CIMB warned of higher loan provisioning and softer revenue growth expectations ahead. Even then, we think there is still downside risk to earnings, with markets-related income and asset quality as key risk areas, it said in a note on Thursday. The research houase said CIMB warned that 4Q14 is going to be a ‘bad quarter’ due to higher loan provisioning for CIMB Niaga’s coal portfolio as well as some provisioning for its domestic corporate book. The ‘clean-up’ exercise is expected to spill over into 1Q15, although the quantum should not be as significant then. With that, CIMB said that its loan loss coverage should rise to more than 80% from 74% as at 30 Sep 2014. There was no guidance on 2014 credit cost except that it would be “higher than the usual run rate”, while guidance for 2015 credit cost will only be provided in the 4Q14 results briefing, it said. RHB said the key area of focus ahead for CIMB is costs. Recall that management had previously set a cost-to-income ratio (CIR) target of 50% by 2015 (from 56% in 2012 while 9M14 CIR was 58%), to be driven by a combination of strong income growth and improved cost efficiency. However, given the current environment, management has dialled back expectations on income growth and hence, the increasedfocus on cost control. CIMB said the issues faced currently are partly structural and partly cyclical, especially for investment banking. Hence, management is looking at operational reorganisation and some rationalisation to streamline some businesses and to improve operational efficiency, it noted. ----------------- Profit.at.Bursa ----------------- | #saham | #cimb |
Posted on: Thu, 22 Jan 2015 03:50:00 +0000
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