MIDF Research said CIMB Group Holdings Bhd’s 92.5%-owned PT CIMB Niaga Tbk is a good proxy to the lucrative Indonesian market.

Its loan restructuring and exit is close to an end, which improves the group’s portfolio, as well as positive net interest margin (NIM) expansion from CIMB Niaga’s asset yield repricing, it added.

“We maintain the target price (TP) unchanged at RM6.16,” it said in a research note today.

RHB Research also retained its “buy” call on CIMB with a TP of RM7, as the outlook for operating income seems decent and asset quality looks stable.

“However, operating expenditure (opex) and funding costs are also on the rise and would dampen earnings growth,” it said.

RHB explained that funding costs include deposit competition, partly seasonal, while opex includes year-end accrued expenses and variable compensation.

“As for credit, there could be higher overlays for Malaysia’s non-retail and Indonesia’s steel. Income was decent as asset yield continued to be repriced while non-interest income benefitted from better fee and trading income,” it added.

Meanwhile, Hong Leong Investment Bank (HLIB) maintained its “hold” call on CIMB with a TP of RM5.85.

HLIB said it would likely observe CIMB’s NIM expansion, steady loans and better non-interest income growth on a sequential basis.

“Overall, we still believe CIMB’s risk-reward profile is balanced since the share price has performed strongly over the past year and there are no new positive catalysts to drive it significantly higher,” it said.

At the mid-day break, CIMB’s share price rose 2 sen to RM5.74, giving it a market capitalisation of RM61.2 billion.