Datuk Seri Nazir Razak
KUCHING: Datuk Seri Nazir Razak’s resignation from his position as group chairman – as well as all other positions within the CIMB Group Holdings Bhd’s (CIMB) group – will not have any negative impact to the group.
CIMB had announced in a statement late Monday that Nazir will step down from his position as group chairman, and all other positions within the CIMB group of companies by December 31, 2018.
“We are neutral on the news and believe it will not have any negative impact to the group’s operations,” the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) said on this latest development from CIMB.
“This is because the group could be considered ‘institutionalised’ and does not depend on an individual. It had a transition in the position of chief executive officer (CEO) in 2014 without any detrimental effect.”
The stock was the 11th most traded yesterday, with more than 24.7 million shares being traded at closing. The share declined three sen or 0.5 per cent to RM6 at the end of the day.
According to MIDF Research, the group continues to have solid operations and earnings potential.
The research arm noted for example that as at the first half of financial year 2018 (1HFY18), normalised 1HFY18 net profit grew 3.3 per cent year on year (y-o-y) despite net income declining 5.2 per cent y-o-y as it was moderated lower loan provisions which fell 29.4 per cent y-o-y to RM746 million.
“Also, since the introduction of its Target 18 (T18) initiative, management have managed to contained operating expenditure (opex).
“In 2QFY18, opex fell for the second consecutive quarter with 2.5 per cent y-o-y versus 6.8 per cent y-o-y in 1QFY18.”
Furthermore, the research arm opined that CIMB is on track to achieve the group’s FY18 targets, with possible headwinds in terms of income to be moderated by containment in expenses and credit cost.
As such, MIDF Research maintained its FY18 and FY19 forecasts, with core net profits at RM4.984 billion and RM5,785 billion, respectively.
“In our opinion, the fundamentals of the group remains solid and the recent announcement will not have any negative impact,” the research arm reiterated.
“Earnings growth will be driven by lower opex and credit cost, while traction for its loans growth will help to mitigate the pressure on income.”
MIDF Research thus reiterated its ‘buy’ call with unchanged target price of RM7.85 per share.