CIMB Group records profit before tax of RM714 million for 1Q20
KUCHING: CIMB Group Holdings Bhd (CIMB Group) has reported a profit before tax (PBT) of RM714 million for the first quarter of 2020 (1Q20).
The weaker PBT was attributed to lower non-interest income ( NOII) and higher provisions across selected markets.
Net interest income (NII) grew by 4.8 per cent, underpinned by steady 3.8 per cent loan growth and operating expenses remained under control.
The group’s 1Q20 net profit stood at RM508 million, translating to a net earnings per share ( EPS) of 5.1 sen and an annualised return on average equity (ROE) of 3.7 per cent.
“We are pleased with the continued robust performance of our underlying business,” CIMB Group said.
“Loan growth stayed healthy across all markets and our current account savings account (CASA) ratio improved significantly to 36.5 per cent.
“Profitability was however, impacted by volatile trading conditions, lower FX income and isolated credits which gave rise to increased provisioning in selected markets.
“With the on- going crisis, CIMB has incorporated the necessary additional measures to quickly adapt to the pandemic and ensure resilience against an uncertain business environment.
“This includes prioritising staff safety with new working arrangements, working closely with our customers to safeguard asset quality and increasing the intensity of our cost management initiatives.”
The group’s 1Q20 operating income remained steady at RM4.14 billion. NII expanded by 4.8 per cent year on year (y- oy) with a marginally lower net interest margin ( NIM) of 2.44 per cent (cf. 2.48 per cent in 1Q19), with spread compression across all operating countries.
However, the group’s NOII declined by 15.5 per cent y- o-y largely due to weaker trading and FX income from markets adversely impacted by Covid-19 at the tail- end of 1Q20.
Operating expenses remained firmly under control, increasing by just 0.7 per cent y- o-y, while the higher cost-to-income ratio (CIR) of 56 per cent (cf. 55.3 per cent in 1Q19) was due to the weaker income during the quarter.
The group’s total gross loans was up by 3.8 per cent y- o-y, with commendable growth across all core markets. Total deposits were 3.9 per cent higher y- o-y, mainly contributed by strong performance in Singapore (up 17.7 per cent) and Thailand (up 13.4 per cent).
In tandem, the group’s CASA ratio strengthened to 36.5 per cent. The loan to deposit ratio ( LDR) stood at 91.2 per cent (cf. 91.4 per cent at March 2019), reflecting sustained strong liquidity.
The group’s gross impairment ratio stood at 3.4 per cent as at end-March 2020, with an allowance coverage of 75.9 per cent.