KUALA LUMPUR (Oct 21): CIMB Group Holdings Bhd (KL:CIMB) is expected to report softer earnings for the third quarter ended Sept 30, 2026, as higher funding costs and weaker trading income weigh on profitability, although its loan growth remains resilient, according to analysts.
The anticipated slowdown follows a relatively strong second quarter, when CIMB recorded a net profit of RM1.94 billion, supported by non-interest income, healthy lending growth and improved cost efficiency.
TA Securities expects CIMB's earnings to moderate as competition for deposits continues to squeeze lending margins, particularly in Malaysia and Indonesia.
The research house said trading income could also ease after a strong first half, while the absence of about RM100 million in non-recurring income in 2Q could weigh on results.
Nevertheless, TA Securities said continued growth in wealth management fees and treasury client sales should cushion the impact.
It maintained its hold recommendation on CIMB but lowered its target price to RM7.42 from RM8.14, citing revised valuation assumptions and weaker investor sentiment.
Public Investment Bank expects CIMB's non-interest income to weaken as higher bond yields could affect trading revenue from fixed-income investments.
The research house cut its earnings forecasts by 4% for FY2026 and 2% each for FY2027 and FY2028.
Public IB expects CIMB's net profit to decline 1.7% to RM7.73 billion in FY2026 from RM7.86 billion a year earlier.
It maintained its outperform call but reduced its target price to RM8.40 from RM8.70.
Maybank Investment Bank, meanwhile, expects CIMB's third-quarter performance to remain relatively resilient, supported by robust lending activity and expanding treasury and wealth management income.
However, it expects Indonesia's challenging operating environment to persist into FY2027, prompting a downward revision of 2% and 1% to its FY2027 and FY2028 earnings forecasts, respectively.
Maybank IB maintained its hold call but cut its target price to RM7.40 from RM8.40.
Separately, CIMB Securities said earnings could soften quarter-on-quarter due to lower trading income, higher credit costs at CIMB Niaga and continued pressure on lending margins.
However, it noted that the impact of recent bond market volatility on the group's earnings appeared manageable, with stronger treasury sales and wealth management income expected to provide support.
On shareholder returns, MBSB Research warned that expectations of special dividends could be disappointed following CIMB's recent share buybacks and a lower-than-anticipated capital repatriation from its Thai auto financing disposal.
CIMB has about RM850 million remaining under its capital return programme after spending approximately RM446 million on share buybacks.
MBSB Research said management was still deciding whether to distribute the remaining amount through special dividends or additional share buybacks.
It maintained its buy call on CIMB but reduced its target price to RM8.35 from RM9.29.
Despite the earnings headwinds, CIMB has maintained its FY2026 return on equity target of 11% to 11.5%, supported by continued loan growth and stronger contributions from fee-generating businesses.
According to Bloomberg consensus, 70% of analysts covering CIMB Group have a buy recommendation, 25% recommend holding the stock and 5% advise selling. The average 12-month target price stands at RM8.60.
Analysts said corporate lending in Malaysia remained a key growth driver, particularly from investments in data centres, electrical and electronics and semiconductor-related projects.