KEY INVESTMENT HIGHLIGHTS

• 3MFY25's Core NP of RM1,090m was Within/Within our/street forecasts: 24%/25% of full-year forecasts
• Management's tone: Optimistic
• Core themes: (a) NIM improvement, (b) Strong NOII improvement, (c) Good contribution from BOCD
• Forecasts unchanged
• Maintain BUY | Unchanged TP of RM22.76 | based on an unchanged FY25F P/BV of 1.16x

Results in a nutshell:

▲ 3MFY25's Core net profit (NP) of RM1,090m up by +6%yoy.

Underpinned by robust growth in NII (+10.5%yoy to RM1.24b) and NOII (32.0%yoy to RM354m).

▲ 1QFY25's Core NP of RM1,090m up by +5%qoq.

▲ Gross loans grew by -0.4%qoq, coming up to -0.4%YTD. Quarter-on-quarter performance was affected by a strengthened Ringgit.

However, year-on-year saw robust gross loans growth of +6.9%yoy.

Retail and Business & Corporates gross loans grew +7.2%yoy and +8.4%yoy respectively.

▲ Deposits grew by -0.5%qoq, coming up to -0.5%YTD. Deposits expanded +4.9%yoy to RM219.4b with main contributor coming from CASA (+13.6%yoy to RM70.4b). Meanwhile, FD contracted marginally by -0.3%yoy to RM114.0b.

▸ GIL moved by +1bps to 0.54%, LLC currently at 146%. Marginal increase and not concerning.

Have a look at:

▲NII was driven by NIM expansion and gross loans growth. NII grew +10.5%yoy to RM1.24b. This was due to NIM expansion of +8bps on the back of strong CASA growth. Robust yearly gross loans growth was also a factor.

▲Strong NOII growth. Wealth management business and GM franchise sales gained traction and drove NOII increase. These grew +32.4%yoy to RM74.2m and +60.3%yoy to RM105.2m.

▲ Bank of Chengdu (BOCD) not really a drag. BOCD continued to be a good contributor to earnings. It saw +11%yoy to RMB9.04b increase in its PAT for 9MFY24 (it has a different financial calendar). Meanwhile, it clocked in a robust ROE of 17.5% with CIR of 24.8%. Nevertheless, the management is focusing on growing the main business. Pre-BOCD earnings came in +8.6%yoy to RM965m.

Forecasts unchanged.

Key downside risks. (1) deposits competition that may compress NIM, (2) higher OPEX, (3) BOCD performance Maintain BUY call: Unchanged GGM-TP of RM 22.76. The TP is based on an unchanged FY25F P/BV of 1.16x (GGM assumptions: FY25F ROE of 11.6%, LTG of 4.0% & COE of 10.5%)

Source: MIDF Research - 29 Nov 2024