KUALA LUMPUR: Affin Hwang Investment Bank Bhd has slightly reduced its 2024 profit after tax and minority interests (Patami) forecast for CIMB Group Holdings Bhd by 2.6 per cent to RM7.7 billion, down from RM7.98 billion.
The investment bank projects that CIMB's Patami for the fourth quarter of 2024 will be around RM1.84 billion, with a sequential decline in fund-based income due to pressure on net interest margins (NIM).
Affin Hwang said the drawdown of some short-term corporate loans was good from a risk-adjusted return on capital perspective and uplifts net interest-income (NII) but these are lower in margins.
"The higher wholesale deposit rates, which were 5.0 to 10 basis points higher in November to December 2024, however did not have a material impact on its entire portfolio.
"In Singapore, NIM has been flat on a quarter-on-quarter basis due to the pre-emptive repricing down of both its wholesale and retail deposits since the third quarter of 2024 as CIMB had anticipated the rate movements back in September," the firm said.
Affin Hwang expects a further increase in return on equity (ROE) beyond 12 per cent, supported by capital and resource reallocation, along with efforts to optimise the business mix, particularly in Thailand's consumer banking and Singapore's commercial banking sectors.
"CIMB has identified the need to turn around its underperforming Thailand business, particularly the consumer finance segment (focusing on improving asset quality and profitability), as part of its new strategic plan," it said.
The firm said CIMB aims to enhance Thailand's ROE to slightly exceed the eight-mine per cent range of its larger market peers, up from six per cent in 2024.
"In the last round of guidance, structural changes, especially on the non-retail side, as to how CIMB approaches client profitability, are planned to be implemented under its new strategy for 2025."
Affin Hwang maintained its "Buy" call on CIMB with a target price of RM9.