CIMB expects its loan growth to improve this year
Bank confident of meeting targets after flat 2017
KUALA LUMPUR: CIMB Group Holdings Bhd expects its loan growth to improve this year after a flat year in 2017.
The group’s loan growth grew by 0.2% last year, which was below its forecast of 7%. The 0.2% loan growth was due to the group’s efforts in cutting back on certain segments like commercial banking and credit cards business in Thailand, and the auto business in CIMB Niaga. There were also some large corporate repayments made in 2017.
However, its Malaysian operations posted a 6.5% loan growth last year, which was above the industry average of 5% as at November 2017, said group chief executive officer Tengku Datuk Seri Zafrul Aziz at the bank’s earnings briefing yesterday.
CIMB group chief financial officer Shahnaz Jammal said excluding the foreign-exchange impact, the group recorded a loan growth of about 3.1% in 2017.
He added that CIMB’s Singapore operations saw a 2.7% year-on-year (y-o-y) decline in loan growth in 2017.
For 2018, the country’s second-largest banking group by asset size is targeting a 6% loan growth, with its Malaysian operations expected to see a stronger loan expansion of 8%.
The growth is expected to be driven by corporate lending, as well as a recovery in its operation in Singapore, Thailand and Indonesia.
“Moving forward, we think the worst is over for CIMB and we are optimistic about 2018 in achieving our T18 targets, on the back of continued momentum in Malaysia and the expectation of further improvement in loan growth and asset qual- ity across Indonesia, Thailand and Singapore,” Tengku Zafrul said.
T18, also known as Target 2018, includes a return on equity (ROE) of 10.5% to 11%, which was revised from an initial 15% in April last year.
CIMB posted an ROE of 9.6% in 2017, exceeding its 9.5% target.
The group, according to Tengku Zafrul, will finalise a new target plan by the fourth quarter of this year following the conclusion of T18 – its medium-term business strategy which started in 2015 and ends at the end of this year.
CIMB’s net profit for the financial year ended Dec 31, 2017 (FY17) jumped 25.5% to RM4.47bil compared with RM3.56bil a year ago.
The figure falls shy of its record RM4.54bil achieved in FY13.
The group’s pre-tax profit was 25.1% higher at RM6.11bil, with loan provisions declining 7.4% y-oy.
Revenue for FY17 improved almost 10% to RM17.62bil against RM16.06bil a year earlier.
For the fourth quarter, CIMB’s net profit jumped 24.1% to RM1.06bil against RM854.38mil previously. Its revenue rose to RM4.51bil against RM4.31bil. The group has declared a second interim net dividend of 12 sen per share to be paid via cash or an optional dividend reinvestment scheme.
For FY17, the total dividend amounted to 25 sen or RM2.28bil, translating to a dividend payout ratio of 51% of FY17’s profits.
The group’s gross impairment ratio stood at 3.4% as at end-December 2017, with an allowance coverage of 70.5%. The group’s cost-toincome ratio improved to 51.8% compared with 53.9% in FY16, in line with stronger revenues and sustained cost management.
The group’s net interest margin was unchanged at 2.63% in line with continued liability management.
As at Dec 31, 2017, CIMB’s total capital ratio stood at 16.5%, while the common equity tier 1 capital ratio strengthened to 12.2%.