KUCHING: CIMB Group Holdings Bhd (CIMB) attributes a slower loans growth for financial year 2011 (FY11) to its more cautious mode, citing recent external uncertainties leading it to be more focused on liquidity and capital efficiencies.

According to a research report by AmResearch Sdn Bhd (AmResearch), CIMB’s annualised loans growth of 11 per cent was below the company’s earlier guidance of an 18 per cent overall loans growth.

Overall loans rose at a slower pace of 2.6 per cent quarter-on-quarter (q-o-q) in the second quarter of the financial year 2011 (2QFY11) compared with 2.9 per cent q-o-q in 1QFY11.

In the group’s cautious mode, it has adopted an intermediation strategy whereby it had largely focussed on origination and selldown of its loans originating from its corporate and investment banking division.

Nevertheless, the research firm also noted that the company expected loans growth to likely pick up in 2HFY11, on the back of better corporate loans expansion based on initialisation of some of the government’s Economic Transformation Programme (ETP).

Meanwhile, OSK Research Sdn Bhd (OSK Research) rationalised that the outlook for net interest margins remained weak coupled with the group’s lacklustre loans growth, it believed that full-year growth in net interest would be subdued.

On the other hand, the research arm of ECM Libra Capital Sdn Bhd (ECM Libra Research) noted that the group would be undertaking a major internal reorganisation exercise mainly in its while sale businesses to streamline its management structures, improve internal efficiencies and enhance customer focus.

ECM Libra Research also noted that the successful implementation of its reorganisation exercise coupled with potentially stronger deal flows could bring down the group’s cost-income ratio from the current 56.2 per cent to 54 per cent.

On a lighter note, ECM Libra Research reported that the group’s 1HFY11 net earnings grew by 9.3 per cent year-on-year (y-o-y) to RM1,886.5 million, accounting for 48.4 per cent and 45 per cent of house and consensus full-year estimates, respectively.

Net income dropped by 1.5 per cent to RM5,709.5 million y-o-y, dragged down by lower non-interest income. Nonetheless, lower loan loss provision of 66.2 per cent y-o-y has helped to boost the net earnings.

In conclusion, AmResearch revised its fair value of RM9 per share. Meanwhile, OSK Research pegged a fair value of RM8.20 per share and ECM Libra Research at RM7.88 per share.