JPMorgan Upgrades CIMB Group To Overweight

JPMorgan upgrades CIMB Group (1023.KU) to Overweight from Neutral and raises its price target to MYR10.00 from MYR8.40. "In the near term, we expect the stock to correct from the current levels due to NIM (net interest margin) pressure. The recent rate hike, though, should lead to easing of NIM pressure," the house says. It lowers its 2011 estimates by 4% to factor in NIM pressure, but expects higher fee income and loan growth over 2011-13 to lead to higher normalized ROE of 18.7%. The house expects increased revenue momentum for the bank as it starts financing Economic Transformation Program related projects. It adds, "the bank's universal banking model should lead to revenue opportunities for both commercial and IB businesses, with loan disbursements later this year and ECM/DCM opportunities starting early 2012." The stock is up 0.4% at MYR8.22.