CIMB Group’s opex to ease whilst non-interest income poised for growth

Loans are poised for a 6% growth, UOB Kay Hian said in a report.

CIMB Group’s operational expenses are expected to ease in 2024 amidst strict cost discipline and with salary adjustments done the year before.

Staff costs rose by 7% in 2023 due to increased unionized staff salaries. Despite this, CIMB managed to keep overall opex growth in check at 5.5%, said UOB Kay Hian analyst Keith Wee Teck Keong.

“With most unionized staff salaries adjusted in 2023, opex growth is expected to ease in 2024 as management intends to maintain strict cost discipline. However, we conservatively anticipate a 6% opex growth in 2024 to account for increased IT spending,” Wee said in a report published on 7 May. 

There is also promising non-interest income growth in Q1, according to UOB Kay Hian. This suggests potential upside risk to UOB Kay Hian’s current 2024 non-interest income growth forecast of 4%, Wee said.

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“A stronger 10% non-interest income growth (vs estimates of 4%) in 2024 could translate to a potential 2.3% upside surprise to our current 2024 group earnings forecast,” he added.

Loans are also poised for growth, with CIMB Group maintaining its assumption of a 6% loan growth for 2024.

“Management maintains its 2024 group loans growth guidance of 5-7%, supported by a strong retail and SME approval pipeline. However, there will be a more disciplined pricing approach for corporate loans,” Wee said.

Notably, Malaysia expected to chart a stronger industry loans growth of 5.5 to 6.0% (vs 2023: 5.3%).