BIMB’s first quarter of financial year 2017 earnings in line with expectations

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KUCHING: BIMB Holdings Bhd’s (BIMB) first quarter of financial year 2017 (1QFY17) earnings have come in line with analysts’ expectations.

According to BIMB, the group’s net profit attributable to shareholders amounted to RM151.1 million in the first quarter ended March 31, 2017, an increase of 11.7 per cent or RM15.8 million from the corresponding period in 2016.

BIMB’s 1QFY17 profit after zakat, tax and minority interest (PAZTAMI) of RM151.1 million was in line with the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus’ estimates coming in at 28.1 per cent and 28.3 per cent of respective full year estimates.

The group’s first three months of 2017 (3M17) core earnings was also within the research arm of Kenanga Investment Bank Bhd’s (Kenanga Research) expectations, accounting for 26 per cent and 25 per cent of its and consensus estimates, respectively.

Kenanga Research’s view on tight loan growth and downside pressure on NFM still held for 2017.

“Recall that earlier Management guided for a cautious year as NFM will be facing downward pressure with competition for longer-term deposits (to meet high Net Funding Stability Ratio by 2018 as required by BNM under Basel III),” the research arm said in a results note.

Thus, the research arm believed the strategy for 2017 still held for selective assets growth, balancing growth and net income, and defending net financing margin (NFM).

Kenanga Research noted that although Islamic Financing is still in demand, management is adopting a moderate growth target of approximately eight per cent for FY17 (with financing slowing down in the last quarters the research arm viewed that this strategy still holds) in order to defend BIMB’s NFM margin.

“We understand that management expects stable asset quality with credit costs for 2017 under 25 basis points (bps),” the research arm said.

The research arm added that based on high loan loss coverage of 175 per cent, initial indications from Bank Negara Malaysia (BNM) is that its 2018 provisioning is adequate; thus, impact of MFRS9 in 2018 is expected to be mild.

As such, no changes were made in Kenanga Research’s earnings forecast for FY17 (RM582.7 million) as results were in line with its estimates.

MIDF Research also maintained its FY17 estimates as the result was within expectations.

The research arm noted that the group is targeting overall loans growth of eight per cent with focus to secure more house and fixed asset financing (HFA) (particularly from affordable housing) and personal financing (PF) assets (particularly from professionals, government servants and selective consumers with salary reduction).

“We believe that this is achievable given the strong showing in 1QFY17,” it said.