Bank Islam Malaysia Berhad - 4QFY24 results: Better Loan Growth in FY25
Mon, 03-Mar-2025 06:33 am
by Samuel Woo • Apex Research

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BIMB (5258)

Target Price (RM)

2.770

Recommendation

Buy

Summary

  • BIMB’s 4QFY24 core net profit jumped +9% yoy and +33% qoq to RM173m, bringing FY24 core net profit to RM568m, which was deemed above our expectations but within consensus, accounting for 108% and 103% of ours and consensus expectations, respectively.

  • Management’s tone: Neutral.

  • Upgrade to BUY recommendation with a higher target price of RM2.77, based on FY25F GGM-PBV of 0.82x.

 

Results above expectations. FY24 core net profit at RM553m (+3% yoy) came above our expectations but within consensus, accounting for 108% of our core net profit forecast at RM526m and was at 104% of consensus forecasted net profit of RM550m.

 

YoY. 4QFY24 core net profit jumped +9% yoy to RM173m, driven by improved NII, NOIII and provisioning, which offset increases in OPEX and tax expenses. FY24 core net profit increased +3% yoy to RM568m, largely due to improved NII and provisioning, which offset OPEX increases.

 

QoQ. 4QFY24 core net profit rose by +33% qoq, largely driven by improved NOII and provisioning, which offset increases in OPEX and tax charges.

 

Outlook. Management expects FY25’s loan growth to normalise to higher levels of 7-8% (from FY24’s disappointing 3.9% yoy), but warns of possible NIM compression to get the necessary funding. Other downsides to ROE target include continuous investment in digital infrastructure, branch revamps, and ongoing union negotiations. Loan growth should be driven by a recovery in corporate loans, which was the main cause of FY24’s loan growth drag. 

 

Earnings Revision. We increase our FY25F and FY26F earnings expectations to factor in higher loan growth, as guided by management.

 

Valuation. Upgrade to BUY recommendation on BIMB with a target price of RM2.77, based on an FY25F P/BV of 0.82x GGM-PBV valuation and +1% ESG factored premium based on 4-star ESG rating. We increase our target price to account for increased earnings expectations as well as our newly-implemented ESG premium. Also, BIMB’s share price has declined considerably, making current valuations far more attractive.

 

Risks. (1) Disappointing loan growth, (2) Higher-than-expected OPEX, (3) Poor NOII performance.

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