KUALA LUMPUR: CIMB Group Holdings Bhd has been downgraded to a 'Hold' by Maybank Investment Bank Bhd (Maybank IB), which also revised its target price to RM7.60 from RM9.00.

The downgrade reflects growing concerns over CIMB's heightened exposure to regional economic volatility stemming from its extensive Asean presence.

Maybank IB said in a note that CIMB's strong footprint across Asean markets makes it more susceptible to regional economic fluctuations compared to peers with a more domestic focus,

As the second-largest financial institution in Malaysia by assets, CIMB also faces potential downside from a domestic slowdown. Its significant operations in Indonesia, Thailand, and Singapore further amplify exposure to regional headwinds, the firm added.

"Further decreases in Indonesia's interest rates could squeeze margins in the near term, while the weakening of the Indonesian rupiah (IDR) could impact the translation of CIMB Niaga's earnings," it said.

Meanwhile, Maybank IB said in light of lower gross domestic product (GDP) growth estimates across the Asean region and expectations of interest rate cuts, the firm has trimmed CIMB Group's financial year 2025 (FY25)/FY26 net profit forecasts by 4.3 per cent/4.9 per cent respectively.

The firm said early indications are that loan growth in the first quarter (Q1 2025) is holding up within management's target of 5-7 per cent for the year.

"This could, nevertheless, be tempered in part by early corporate repayments and some forex impact from weakness in the Singapore Dollar and IDR. Moreover, corporations are generally adopting a wait-and-see attitude.

"The group's loan exposure to trade-related companies is estimated to be less than 5 per cent of total loans. Net operating interest income, meanwhile, is expected to improve sequentially in Q1 2025, due to robust trading and forex income," it added.