Analysts raise CIMB target price on ‘surprise’ capital return initiative

[SINGAPORE] Analysts are maintaining their bullish stance on Malaysian bank CIMB Group Holdings following its third-quarter earnings and the surprise announcement of a capital return road map, with research houses raising their target prices on the counter.

AmInvestment Bank raised its target price on the counter to RM8.65 from RM8.11, and CGS International (CGSI) raised it from RM8.60 to RM8.90. Maybank Investment Bank (Maybank IBG) also upgraded its call from “hold” to “buy” and raised its target to RM8.60, from RM7.60 previously, and Citi Research increased from RM8.10 to RM8.40.

Capital return initiative

On Nov 28, CIMB posted its earnings results for the nine-month period ended Sep 30. Net profit inched up 0.2 per cent to RM5.94 billion (S$1.86 billion), from RM5.93 billion in the corresponding period last year.

On the same day, the bank announced it would be returning up to RM2 billion of capital to shareholders by end-2027, through special dividends or share buybacks subject to market conditions and regulatory approvals.

It also declared a special dividend of RM0.07 per share, which will be disbursed on Dec 24.

Analysts highlighted CIMB’s newly announced capital return road map as a primary driver for their improved valuations, with the plan serving as a key catalyst alongside a resilient earnings performance.

“The initiative is expected to strengthen capital efficiency and boost return on equity (ROE),” AmInvestment Bank analyst Kelvin Ong said in a report on Monday (Dec 1).

“We reiterate our ‘buy’ call on CIMB with a higher target price... This reflects potential capital returns to shareholders of up to RM2 billion by 2027,” he added.

Citi Research analysts also highlighted the capital return plan as a key takeaway, describing the timing of the announcement as a “surprise”. CGSI similarly called the plan a “positive surprise”.

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Citi Research analyst Yong Hong Tan said in a report on Friday that while it had forecast CIMB to declare a special dividend per share (DPS) of RM0.07, the timing came earlier than expected, and the additional RM1.34 billion, which could be done via special dividends/buybacks, was an additional surprise.

CGSI analyst Winson Ng said in his report on Monday: “We assume that the remaining RM1.24 billion will be paid (as special dividend) evenly over the next two years, translating to special DPS of 5.8 sen per annum in FY26F and FY27F.”

Maybank IBG, which also named CIMB a top sector pick in Malaysia banking, identified the capital returns as essential to the stock’s yield appeal.

“With ongoing capital returns, we expect special dividends to sustain dividend yields at (more than) 6 per cent,” said Maybank IBG analyst Desmond Ch’ng.

Earnings review

CGSI noted that CIMB’s recent results were within expectations, accounting for about 76 per cent of its full-year forecast.

Citi Research described the results as a “beat”, driven by strong trading and foreign exchange income which offset net interest margin (NIM) compression. AmInvestment noted the earnings were in line, achieving 75 per cent of its full-year forecast.

Sector outlook

Looking ahead, analysts are turning more optimistic on the broader banking sector. Maybank upgraded the Malaysia banking sector to “positive” from “neutral,” citing a more “conducive” operating environment in 2026.

“Having weathered through economic volatility and many challenges to funding cost in 2025, we expect 2026 to be an operationally more conducive year for the sector,” Maybank’s Ch’ng said.

He projects aggregate net profit growth of 5 per cent for the sector in 2026, supported by domestic economic growth, the absence of further rate cuts and easing liquidity pressure.

Specifically for CIMB, Maybank expects an improved operating environment with lower margin pressure in Singapore and a stable economic outlook in its key markets of Malaysia and Indonesia.