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BusinessToday
2 days ago
- Business
- BusinessToday
CIMB Expected To Deliver "Decent" Performance In Q2
CIMB Group is expected to deliver a 'decent' performance for its second quarter of 2025, supported by stable net interest margins (NIMs) and strong non-interest income, according to a pre-results analysis by Maybank Research. The research firm has maintained a 'Hold' call on CIMB with an unchanged target price of MYR7.60, pending the official release of the group's results. CIMB Group is scheduled to announce its 2Q25 results on August 29, following the release of its Indonesian subsidiary, CIMB Niaga, on July 30. Maybank Research highlights several positive factors contributing to the bank's expected performance for the quarter ended June 30: Net interest margins (NIMs) are likely to have remained stable quarter-on-quarter, with positive traction in Malaysia and Singapore offsetting some compression in its Thai and Indonesian operations. The report anticipates a sequential increase in non-interest income, driven by sustained trading and foreign exchange activities. Asset quality is expected to remain stable, with credit costs likely to be benign. The report notes that CIMB's credit cost guidance of 25-35 basis points for the full year 2025 remains intact, suggesting a potential positive surprise as Maybank's own forecast for the year is a slightly higher 36 basis points. However, the report points to one area where results may be weaker than expected: loan growth. According to Maybank Research, the group has been cautious in lending to the corporate and commercial sectors due to competitive yields. This has led the research house to forecast a loan growth of 4.5% for the full year, below CIMB Group's own target of 5-7%. Despite the mixed outlook, Maybank Research is keeping its earnings forecasts unchanged, believing the positive elements of stable margins and strong non-interest income will support its existing assumptions for the group. The report concludes that while the group is positioned for stability in the near term, its 'Hold' rating reflects a cautious but fair valuation at this juncture. Related
Borneo Post
10-07-2025
- Business
- Borneo Post
Banking sector negatively impacted by OPR cut
Generally, every 25bp cut in our OPR would result in a 2 to 3 bps NIM compression on average, which would lead to a 1 to 2 ppt reduction in banking player's earnings. KUCHING (July 10): Bank Negara Malaysia's (BNM) 25bps cut to our Overnight Policy Rate (OPR) is expected to negatively impact our banking sector through net interest margin (NIM) compression says industry analysts. On July 9, BNM announced that they have decided to reduce our OPR rate from 3.00 per cent to 2.75 per cent, the first cut since July 2020. Majority of industry analysts viewed the cut as a pre-emptive measure by BNM to preserve Malaysia's steady growth path amid current macroeconomic uncertainties. In a sector report on July 10, the research arm of Maybank Investment Bank Bhd (Maybank Research) guided that generally, every 25bp cut in our OPR would result in a 2 to 3 bps NIM compression on average, which would lead to a 1 to 2 percentage point (ppt) reduction in banking player's earnings. 'Based on our estimates, there is a slightly larger 3 to 4bps impact to the NIMs of Alliance Bank Malaysia Bhd (ABMB), Public Bank Bhd (PBK) and RHB Bank Bhd (RHB),' they added. Public Investment Bank Bhd (PublicInvest Research) explains that this is because banks with lower levels of fixed-rate loans and current account and or savings account (CASA) deposits will be more susceptible to rate cuts. 'ABMB should see the highest compression in NIM due to its relatively higher proportion of variable rate loans of circa 84 per cent. However, ABMB's CASA ratio of 41 per cent could help to cushion some negative impact,' they shared. Meanwhile, banks like Malayan Banking Bhd (Maybank) are expected to be largely insulated from the OPR cut due to their lower proportion of variable rate loans which currently sits at circa 70 per cent. Despite this NIM compression, analyst Maybank Research and Midf Amanah Investment Bank Bhd (Midf Research) make no changes to their pre-existing forecasts as they have already factored in the 25bps cut in their estimates. On the other hand, PublicInvest Research has opted to adjust their bank earnings forecasts under their coverage downward by an average of 3 to 4 per cent. And while in theory credit demand would benefit from this rate cut, PublicInvest Research cautions that loans growth will instead likely taper due to slower economic growth dragged by rising global trade uncertainty. Looking ahead, Maybank Research and Midf Research opine that there will be no more further rate cuts in 2025. However, Midf Research guides that should another 25bps OPR cut happen, from an earnings standpoint they reckon that smaller banks will be more impacted by it due to their nearly 100 per cent exposure to local loans. Moreover, Maybank Research believes that there are also several factors that serve to buffer the compression in NIM such as the recent 1ppt Statutory Reserve Requirement (SRR) cut which released about RM19 billion of liquidity into the banking system, a declining Kuala Lumpur Interbank Offered Rate (KLIBOR) which is indicative of reduced funding pressure, and lower bond yields, which could contribute to potential marked-to-market gains on Fair Value To P&L (FVTPL) investments. banking economy overnight policy rate
BusinessToday
06-07-2025
- Business
- BusinessToday
Zetrix AI Emerging As Key Driver In Nation's Blockchain Push
Zetrix AI is poised for significant revenue growth driven by its involvement in Malaysia's government-mandated national blockchain platform, as highlighted by Maybank Research. While the research firm has maintained its earnings forecasts for FY25-27E, it has adjusted Zetrix AI's target price lower to MYR1.45 (from MYR2.00), pegged to 15x FY26E Price-to-Earnings Ratio (PER) to better reflect the company's evolving business model as a national blockchain developer. The Malaysia Blockchain Infrastructure (MBI), launched on June 28, 2025, is a key driver for Zetrix AI's growth. Jointly developed by Zetrix AI and MIMOS, MBI is designed to support both public and private sector applications. Built on Zetrix AI's proprietary Layer-1 blockchain, it aims to serve as a 'national backbone' for critical functions such as verifiable credentials (VC), supply-chain traceability, and asset tokenization. Among its applications, MyDigital ID (for digital identity verification) and MyGov (for digital decentralization/notarization of government records) are already live on the platform, with MyDigital ID alone boasting 2.5 million active users. MyDigital ID is already generating revenue for Zetrix AI. The company earns MYR0.40 per transaction from service providers who utilize MyDigital ID for credential authentication. These service providers span various sectors, including government agencies (such as the Immigration Department), social media companies, government-linked companies (GLCs), and even startups like Masverse, iTrace, and Cokeeps. Maybank Research estimates that Zetrix AI accrued approximately MYR5 million in revenue from VC authentication in the second quarter of 2025, a figure projected to double in the third quarter. For the full fiscal year 2025, VC-related revenue is forecast to reach MYR40 million, already imputed in the research firm's earnings estimates. Revenue accretion is expected to snowball further with the anticipated launch of My Superapp later this month. This new application will enable Malaysia's estimated 40 million annual foreign visitors to digitize their passports and driving licenses for use within the country. Zetrix AI plans to charge MYR100 per application. Despite being an optional service, the revenue potential is substantial, even if only a fraction of foreign visitors subscribe for the added convenience. Maybank Research highlights that this strategic shift from an exclusive government-to-government (G2G) service provider to a broader national blockchain developer underpins Zetrix AI's long-term growth trajectory, despite the recalibrated valuation. Related
BusinessToday
17-06-2025
- Business
- BusinessToday
Maybank Estimates April GDP Lower At 4.8%, Reflects Recent IPI Data
Malaysia's economic growth moderated in April 2025, with Maybank Research estimating gross domestic product (GDP) expansion at 4.8% year-on-year, down from 6.0% in March and 6.2% in April last year. The slowdown reflects a mixed bag of industrial and trade performance, with strength in manufacturing and exports partially offset by weaker mining output and softer consumer demand. The moderation was largely driven by a weaker Industrial Production Index (IPI), which grew 2.7% year-on-year in April compared to 3.2% in March. While manufacturing activity picked up to 5.6% (Mar: +4.0%), sharp declines in mining (-6.3%) and continued contraction in electricity output (-1.6%) weighed on overall industrial growth. Manufacturing gains were powered by stronger output in both export-oriented and domestic industries. Export-oriented production rose 6.4% (Mar: +4.8%), with notable growth in: Electronics & Electricals: +9.9% (Mar: +13.2%) Vegetable & Animal Oils & Fats: +22.8% (Mar: +10.6%) Chemicals & Chemical Products: +4.7% (Mar: +4.9%) Domestic-oriented manufacturing also saw steady expansion at 3.9% (Mar: +2.3%), supported by increased production of food processing products, fabricated metal goods, basic metals, and non-metallic mineral products. The drag from the mining sector was significant, reflecting lower production of crude oil and condensates (-0.7%) as well as natural gas (-10.0%). Electricity output declined for the second straight month. However, crude palm oil (CPO) production rebounded sharply (+12.3%) after a brief contraction in March. Domestic trade activity lost some momentum, with the Distributive Trade Index rising 4.3% in April (Mar: +5.0%). Retail trade growth slowed to 3.4% (Mar: +4.9%), while motor vehicle sales remained tepid at 0.8%. Wholesale trade, however, posted a slight improvement at 6.6% (Mar: +6.3%). Malaysia's external trade saw strong recovery in April, with export values surging 16.4% year-on-year and volumes up 15.6%. Imports also jumped by 20.0% in value and 24.5% in volume, following contractions in March. Despite this rebound, the downtrend in intermediate goods imports raises caution about future manufacturing momentum. Private Consumption Holds Steady Private consumption remained resilient in the first four months of the year, with retail trade growing 4.7% year-on-year—slightly ahead of 2024's pace of 4.4%. Maybank maintains its full-year forecast for private consumption growth at 5.3%, supported by a healthy job market and various government initiatives, including: Civil service pay and pension reviews Minimum wage hikes Increased cash assistance under Budget 2025 Income tax reliefs for the middle-income group The investment upcycle appears to be continuing, with strong capital goods imports and steady financing for industrial construction indicating sustained business confidence. However, Maybank cautioned that the trajectory could face headwinds if the weakness in intermediate goods imports persists. While April's data showed mixed signals, Maybank notes that Malaysia's economy continues to find support from domestic demand and export recovery. However, with certain leading indicators pointing to a possible softening ahead, the growth trajectory for the remainder of the year remains subject to downside risks. Related
Borneo Post
12-06-2025
- Business
- Borneo Post
Developers' ability to pass on SST costs to buyers dependent on economic conditions
The recent announcement of six per cent SST on construction services starting from July 1, 2025 is a negative surprise to property developers due to possible margin pressure for ongoing or sold projects. — Bernama photo KUCHING: Property developer's ability to pass on the proposed six per cent sales and services tax (SST) costs for its current projects onto buyers will depend on the current prevailing economic conditions says analysts from Maybank Investment Bank Bhd (Maybank Research). In a real estate sector report, the analyst guided that the recent announcement of six per cent SST on construction services starting from July 1, 2025 is a negative surprise to property developers due to possible margin pressure for ongoing or sold projects. While there is currently no guideline on how the SST would apply to contracts entered into before July 1 but billed thereafter or if it is only applicable to contracts signed after, the analyst guides that they cannot discount the possibility that developers may have to absorb the additional cost for commercial and industrial builds. 'To avoid margin erosion stemming from rising construction costs, we believe developers are likely to pass on these additional costs from unsold stock and future projects to buyers, though this is subject to prevailing market demand,' they guided. A slower economic growth trajectory and weak market demand could constrain pricing power causing developers to face margin squeeze. Maybank Research also points out that as most contracts incorporate a regulatory change review clause, developers are expected to bear this SST rather than contractors. 'Developers engaged in data centre (DC) construction, including ECW and SDPR, could also see increased expenditures, potentially reducing their internal rate of return (IRR),' they opined. Furthermore, the analyst also notes that the 8 per cent SST on rental income while borne by tenants is still a negative impact to developers as it could restrain their leverage for rental increment negotiations, especially as many developers has placed a strategic emphasis on generating recurring income from investment property such as malls in recent years. To reflect this increased risk of margin's squeeze on developers, Maybank Research estimates a circa four sen reduction in Ecoworld Bhd's and Sime Darby Property Bhd's revised net asset value (RNAV) estimates due to the six per cent SST costs associated with their DC projects. To recap, effective July 1, 2025, construction services for infrastructure, commercial, and industrial buildings will be subject to a six per cent SST if the taxable value exceeds RM1.5 million annually. However, exemptions are provided for residential buildings, public utilities relating to housing, and non-reviewable contracts which will enjoy a 12-month grace period from the effective date.
