CDM: Performance analysis and outlook

OUR SCENARIO IS MATERIALIZING…, WE MAINTAIN OUR BUY RECOMMENDATION

As of January 27th 2025, we reviewed upwards CDM's growth forecast and target price. (Research Report - CDM Update 24E-26E). The latter was raised from MAD 1,100 to MAD 1,253. Following the release of CDM's FY 2024 annual results, it is clear that our scenario is materializing, with achievements exceeding our forecasts and a share price performance of nearly +16% since our initial recommendation on October 28th 2024 (AGR-SPO CDM 2024).

We’re maintaining a positive outlook on CDM stock, with the prospect of reviewing our forecasts and target price on the ST. We therefore reiterate our BUY recommendation.

The key takeaways from CDM's 2024 achievements are as follows: 

• Net Banking Income (NBI) rose by +12.9% to MAD 3,303 Mn, compared to an AGR forecast of MAD 3,224 Mn, representing an achievement rate of 103%. The slight gap is attributable to the performance of Market Activities(1), which generated MAD 415 Mn compared to an estimate of MAD 353 Mn. The Net Interest Income was in line with our expectations, up +9.1% thanks to the commercial dynamic of loans, which recorded their strongest growth over the last decade, +10.9% to MAD 56.6 Bn. This performance was driven by Investment Loans (+25.1%), Real Estate Development (+32.5%), and Leasing (+64.4%).
• The Cost-to-Income ratio (C/I) improved by 6 points to 48.6%, identical to our forecasts. The good control of operating expenses is supported by the non-recurrence of certain costs recorded in 2023: empowerment costs, the donation to the Special Earthquake Fund, and the tax audit.
• The Cost of risk (CoR) remained identical to the forecast, at MAD 398 Mn, down -10.5%. This performance was largely expected thanks to the improvement of the NPL ratio(2).
• The Net Income Group Share (NIGS) stood at MAD 741 Mn, up +47.3% against an estimate of MAD 704 Mn. The DPS is set at MAD 41.7 Mn against a forecast of MAD 45.0 Mn. This is still the highest D/Y within the listed banking sector, at 3.7%.