CIMB shares down on CIMB Niaga's subdued results
Published on: Tuesday, August 04, 2015
Kuala Lumpur: CIMB Group Holdings Bhd's shares fell six sen to RM5.32 at lunch break today, pulling the benchmark index down by 0.882 of a point, with 1.002 million shares changing hands.Affin Hwang Capital has maintained a "hold" call on the stock with a target price of RM5.90."CIMB's Indonesian subsidiary, PT Bank CIMB Niaga Tbk, saw another subdued financial results for the second quarter of its financial year ended Dec 31, 2015, (FY15) though within expectations," it said in a research note.
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It said earnings for FY16 would potentially rebound in the absence of heightened provisions."We expect a steadier outlook for CIMB Niaga in the second half of FY15, as provision should ease given that loan loss cover is at 99.6 per cent and the Mutual Separation Scheme (MSS) exercise cost of 500 billion rupiah will be recognised in the third quarter of FY15 but is expected to translate into annual savings of 400 billion rupiah," it added.Meanwhile, Kenanga Research said CIMB Niaga's earnings in the first half of 2015 of 176 billion rupiah (-91 per cent year-on-year) was below expectations, representing only five per cent of both the research house and consensus' full-year forecasts. "The shortfall was due to a sharp decline in non-interest income and higher provision for bad loans," it said.
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