CIMB PROFIT SOARS TO RM1.18B

45pc increase due to higher interest, non-interest and Islamic banking income, and lower bad loan allowance

ZARINA ZAKARIAH

KUALA LUMPUR zarinaz@mediaprima.com.my

CIMB Group Holdings Bhd has recorded its highest quarterly net profit on higher interest, non-interest and Islamic banking income as well as lower bad loan allowance.

CIMB said its net profit rose 45 per cent to RM1.18 billion in the first quarter ended March 31, compared with RM813.8 million in the corresponding quarter last year. Revenue was also higher at RM4.36 billion compared with RM3.73 billion a year earlier.

CIMB group chief executive officer Tengku Datuk Seri Zafrul Tengku Aziz said the strong results represented the hard work and focus by all its business segments, supported by enhanced teamwork and cooperative spirit.

“Admittedly, there were times when it had been rather challenging, especially when we were doing so much recalibration to strengthen the foundations of the CIMB group.

“But we are beginning to see the fruits of our labour, not least through the RM23 billion increase of CIMB’s market capitalisation since January last year. We will remain vigilant and continue with our efforts to sustain the good momentum we have achieved so far,” said Tengku Zafrul yesterday.

“Our main business units are gaining traction, with cost management initiatives continuing to show progress and asset quality showing sustained improvement.”

CIMB’s operating income grew 17.1 per cent year-on-year to RM4.36 billion, largely driven by 32.3 per cent growth in non-interest income in line with improved capital market activity.

Its first-quarter net interest income also rose 11.5 per cent on loans growth and improvement in net interest margin. Net earnings per share stood at 13.3 sen while the annualised net return on average equity was 10.3 per cent.

“While revenue growth was healthy and costs kept in check, the relatively flat profit before tax (PBT) performance was attributed to higher provisions from the credit cards and auto finance business in Indonesia. The regional commercial banking business continues to expand but the 7.8 per cent lower PBT was due to the higher yearon-year provisions in Thailand.”

The group’s costto-income ratio improved to 52.6 per cent, compared with 57.4 per cent in the first quarter last year, in line with the stronger revenues and controlled cost increases.

Its net interest margin also improved to 2.72 per cent on better liability management in Indonesia, Thailand and Singapore, said CIMB in a statement.

“We will continue to keep a tight rein on cost, strive to enhance operating income while expecting improvement in asset quality,” said Tengku Zafrul.

On a quarter-on-quarter basis, CIMB’s operating income was 1.1 per cent higher at RM4.36 billion, with net interest income growing one per cent and non-interest income 1.4 per cent.

“Looking ahead, the group is cautiously optimistic for the rest of the year, with more stable economic conditions, increased regional activity, improved capital markets and declining provisions across our key geographies. The group is currently on track to achieve its key financial targets for this year,” he added.

MIDF banking sector analyst said CIMB’s net profit was within its expectations albeit at the upper end on solid gross loans growth and improved margins.

“We were pleasantly surprised that mortgages continued its growth trajectory, especially at 12 per cent year-on-year in Malaysia, which is above that of the industry.

“All-in-all, we believe that this was a stellar performance for CIMB and reinforced our optimism for the group,” said the analyst who expects situations to improve in Indonesia and Thailand.

The regional commercial banking business continues to expand but the 7.8 per cent lower profit before tax was due to the higher year-onyear provisions in Thailand.”