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

New Straits Times - - Business - TENGKU DATUK SERI ZAFRUL TENGKU AZIZ CIMB group CEO


KUALA LUMPUR zari­naz@me­di­

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.”

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