KUCHING: BIMB Group Holdings Bhd recorded growth in its profit before zakat and tax (PBZT) of 2.3 per centyoy to RM367.8 million due to growth in business activities.
Meanwhile, Takaful Malaysia PBZT grew more robustly at 13.2 per cent year on year (y-o-y) to RM113.6 million on higher net wakalah fee income.
MIDF Amanah Investment Bank Bhd (MIDF Research) saw that BIMB’s net income for 1HFY17 grew moderately at 5.7 per cent y-o-y due to higher distributable income.
“We believe that the main contributor for the income growth was the strong net financing growth,” it detailled. “Net financing asset expanded 11.5 per cent y-o-y to RM40.5 billion as at 2QFY17.
“Correspondingly, fund based income also increased, by 6.1 per cent y-o-y to RM63.5 million. The net financing asset growth came from strong expansion in the housing segment. Financing for housing expanded 17.8 per cent y-o-y to RM15.1 billion.”
Meanwhile, the firm saw that BIMB experienced higher operating expenditure (opex) which came from increased spending on promotion and general expenses, where it grew 16.5 per cent y-o-y to RM132.1 million and 7.4 per cent y-o-y to RM98.7 million respectively.
Its customer deposits and investment accounts rose 13.4 per cent y-o-y to RM48.1 billion. CASA ratio as at 2QFY17 was 31.6 per cent.
The group’s asset quality remained steady as its gross impaired loans ratio stood at 1.02 per cent.
Kenanga Investment Bank Bhd (Kenanga Research) said at the PBZT level, both its Islamic banking and the takaful business saw moderate performance whereby both slowed to 2.3 per cent and 12.7 per cent y-o-y, respectively.
At the group level, Net Financing Margins (NFMs) compressed by 13bps to 2.2 per cent as yields fell faster than average cost of funds (COF) exacerbated by CASA ratio falling by five percentage points y-o-y to 31.9 per cent.
Cost to Income ratio (CIR) was higher by 130 basis points (bps) at 56.6 per cent as opex outpaced top-line growth.
“Our view on tight loan growth and downside pressure on NFM still holds for 2017,” MIDF Research added. “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.
“Thus, we believe the strategy for 2017 still holds namely for selective assets growth, balancing growth and net income, and defending NFM.”
Although Islamic financing is still in demand, MIDF Research said BIMB’s management is adopting a moderate growth target of about eight per cent for FY17 – with financing slowing down in the last quarters we view that this strategy still holds – in order to defend its NFM margin.
“We understand that management expects stable asset quality with credit costs for 2017 under 25bps. Initial indications from BNM is that its 2018 provisioning is adequate; thus, impact of MFRS9 in 2018 is expected to be mild.”