KUALA LUMPUR, May 29 ― CIMB Group Holdings Bhd's posted a lower net profit of RM1.19 billion in the first quarter which ended March 31, 2019 (1Q 2019) compared to RM1.31 billion in the same period last year.
Revenue also fell to RM4.17 billion from RM4.30 billion previously.
In a filing with Bursa Malaysia today, the bank said its pre-tax profit (PBT) also decreased to RM1.60 billion in 1Q 2019 from RM1.34 billion in 1Q 2018, attributed to a lower operating income and a 7.5 per cent increase in operating expenses, partially offset by a 25.2 per cent year-on-year (y-o-y) decline in loan loss provisions.
“CIMB Group's Q1 2019 operating income was 3.2 per cent lower y-o-y at RM4.17 billion due to a 19.3 per cent decline in non-interest income, this was attributed to the absence of the RM152 million one-off gain from the sale of 50 per cent of CIMB Securities International Pte Ltd (CSI) in Q1 2018.
“It was also due to lower bancassurance and wealth management fees, partially offset by a 4.3 per cent y-o-y growth in net interest income on the back of a 7.6 per cent loans growth,” said the country’s second-largest bank.
On the increase in operating expenses, CIMB Group said it was from the incremental investments and Forward23-related expenses which saw the group’s cost-to-income ratio (CIR) registering at 55.3 per cent in Q1 2019 from 49.8 per cent in Q1 2018, with a 25.2 per cent y-o-y decline in loan loss provisions.
“The group's 55.3 per cent CIR was due to higher operating expenses and lower revenues, and the group’s net interest margin was lower at 2.48 per cent due to spread compression in Malaysia and Thailand,” it said.
On loan growth, it said the group’s total gross loans grew by 7.6 per cent y-o-y while total deposits were 5.6 per cent higher y-o-y.
“The loan to deposit ratio stood at 91.4 per cent as compared with 89.7 per cent registered as at end-March 2018,” it said.
CIMB Group said its gross impairment ratio stood at three per cent as at end-March 2019, with an allowance coverage of 103.5 per cent.
Moving forward, group chief executive officer Tengku Datuk Seri Zafrul Aziz in a separate statement said, the company expected the rest of the year to remain challenging, amidst fresh trade tensions and other macroeconomic headwinds, in addition to tougher operating conditions in major markets.
“However, we are confident that Forward23, our newly launched strategic growth plan, will accelerate growth and future-proof CIMB, particularly through investments in customer experience, our people and technology,” he added. ― Bernama