KUALA LUMPUR: Maybank Investment Bank has raised its non-fund-based income with higher net interest margin (NIM) estimates, and upgraded 2023 financial results, 2024 and 2025 estimate earnings for Bank Islam Malaysia Bhd (BIMB) by 4 per cent, 3 per cent and 2 per cent respectively.
BIMB announced yesterday that its profit after zakat and tax rose 16 per cent to RM136.14 million in the second quarter (2Q) ended June 30, 2023, from RM117.16 million in the same quarter last year on higher net income. Revenue jumped to RM1.12 billion in the reviewed quarter versus RM822.51 million before.
For the six-month period, profit after zakat and tax surged 14 per cent to RM254.23 million from RM223.07 million a year earlier, while revenue rose to RM2.22 billion from RM1.60 billion previously.
“BIMB’s 1H 2023 earnings were within our expectations, and we tweak earnings up by 2-4 per cent for FY2023-2025 estimates. Positively, the bank bucked the industry trend with a quarter-to-quarter improvement in NIM and its gross impaired financing ratio,” it said in its research note today.
The investment bank said it maintain a “Hold” call on BIMB with a slightly higher Target Price of RM2.20 (from RM2.05) on rolling forward valuations to 2024 financial year estimates.
Meanwhile, Hong Leong Investment Bank Research said BIMB’s net financing margin (NFM) may drop in the third quarter of 2023 if it attempts to shore up its deposits base again as it released a portion of it this quarter.
Moreover, the need to build up its small retail deposits base, which is stickier in nature (at present relying on government and statutory bodies) could further dent NFM.
Separately, credit growth is still seen to taper due to softer macro environment, it said.
“Even though gross impaired financing ratio is now over 1.0 per cent, we draw some comfort that its financing loss coverage remained more than 100 per cent; this provides some buffer to cushion any further asset quality weakness in the short term that may stem from macro headwinds and tighter monetary policy.”
It made a “Buy” call with a target price of RM2.35.
At 9.17 am, BIMB was up three sen to RM2.12 with 378,900 shares traded on Bursa Malaysia.– BERNAMA
