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Singapore Investment


  BIMB 5258  BANK ISLAM MALAYSIA BERHAD back on investors’ radar. Is this time to rush in?

Bank Islam Malaysia Bhd saw heightened interest on June 22 rising 7.2% to close at RM1.93.

Investors are hoping for a strong revival after it declined to a 52-week low of RM1.70.

It touched a year high of RM2.74 in January this year but fizzled out subsequently.

Institutional investors was the group most impacted after the company's market cap fell to RM5 billion in February.

If the decline continues, institutional investors may be pressured to sell their stakes in Bank Islam Malaysia which might hurt individual investors.

That said, analysts are still bullish on the counter with AmInvest Research although it has revised its fair value lower to RM2.20 from RM2.30 previously.

The research house lowered its FY23 book value per share on an enlarged number of shares.

Its fair value is based on FY23 ROE of 7.6% leading to a price to BV of 0.7x.

AmInvests maintains its earnings forecast in view that the 1Q23 underlying earnings were within expectation, accounting for 23% of its FY23 net profit and 20% of consensus’.

The bank reported a higher 1Q23 core net profit of RM118 mil, which grew 1.4% YoY after stripping out the impact of Cukai Makmur in 1Q22.

The improved earnings were driven by higher net fund-based income from loan expansion and an increase in non-fund based income,  partially offset by higher provisions and operating expenses (opex).

Bank Islams’ 1Q23 saw a stronger non-fund based income of RM105 mil  (+132.4% YoY). This was supported by higher investment income (+RM22.4 mil) from gains in disposal of investment securities, higher FX profits and marked-to-market gains in  unit trust of BIMB Investment compared to unrealised losses recorded in the preceding quarter of the previous financial year.

Opex grew 21.5% YoY in 1Q23, largely contributed by higher personnel cost from salary adjustments and investments in new talents, RM6.1 mil increase in IT  expenses and RM6.2 mil in banking transaction-related expenses.

Bank Islam’s gross financing accelerated to 10.7% YoY in 1Q23, outpacing the industry’s loan expansion of 5% YoY.

Retail loans (consumer & SME) expanded by 8.8% YoY while business loans (corporate & commercial) grew by 17.1%  YoY.

However, investors are not overly excited about Bank Islam's flat earnings over the past five years.

In the long run, the best dividend stocks all grow their earnings per share.


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