KUALA LUMPUR, Nov 22 — CIMB Group Holdings Bhd’s net profit for the third quarter ended Sept 30, 2019 ((Q3) eased to RM1.01 billion from RM1.18 billion in the same period last year.
Revenue, however, rose to RM4.64 billion from RM4.14 billion previously.
Group chief executive officer Tengku Datuk Seri Zafrul Tengku Abdul Aziz said CIMB Group’s underlying performance remained strong despite the challenging environment.
“The better performance was driven by higher net interest income (NII) and non-interest income (NOII), coupled with lower provisions.
“Our balance sheet growth remained strong with loans and deposits growing steadily, driven by our Malaysian consumer business,” he said in a statement today.
For the first nine months of its financial year ending Dec 31, 2019 (9MFY19), CIMB Group’s net profit declined to RM3.68 billion from RM4.54 billion in the same period last year and revenue decreased to RM13.27 billion from RM13.31 billion previously.
Tengku Zafrul said excluding the one-off RM928 million gain from the partial sale of CIMB-Principal Asset Management (CPAM) and CIMB-Principal Islamic Asset Management (CPIAM) in the first nine months of its last financial year (9MFY18), the banking group’s net profit in 9MFY19 grew 4.9 per cent year-on-year (y-o-y) or an annualised return on average equity (ROE) of 9.1 per cent.
He said the banking group recorded a strong operating income of RM13.27 billion, up 7.2 per cent (y-o-y) underpinned by growth in NII and NOII.
“NII grew five per cent y-o-y to RM9.31 billion from the 5.6 per cent loan growth, while the 12.8 per cent improvement in NOII to RM3.96 billion came largely on the back of improved capital market activity,” he said.
He said net interest margin (NIM) declined slightly to 2.47 per cent in 9MFY19 from 2.52 per cent in 9MFY18 mainly from the spread compression in Malaysia and Thailand.
“Loan loss provisions declined 9.8 per cent to RM1.03 billion, equivalent to a loan loss charge of 0.38 per cent,” he said.
He said CIMB Group’s total gross loans and total deposits grew by 5.6 per cent and 7.3 per cent y-o-y respectively, contributed by strong growth by Malaysia and Thailand operations.
“The loan to deposit ratio (LDR) stood at 91.6 per cent, reflecting a strong liquidity position with our current account saving account (CASA) ratio strengthening to 34.3 per cent,” he said.
He said the banking group’s gross impairment ratio stood at 3.2 per cent as of end-September 2019, with an allowance coverage of 94.8 per cent.
Tengku Zafrul said CIMB Group’s commercial banking profit before tax (PBT) rose by 102.4 per cent y-o-y to RM1.37 billion underpinned by significantly lower provisions and improved NOII.
He said PBT at the banking group’s wholesale banking division increased by 16.7 per cent y-o-y to RM1.50 billion from lower corporate provisions and improved capital market activity which brought about a 14.2 per cent growth in NOII.
However, he said the overnight policy rate (OPR) cut in Malaysia and increased provisions from the Malaysian Financial Reporting Standards 9 (MFRS9)-related effects had an impact on the banking group’s consumer banking with PBT declining 36.2 per cent y-o-y to RM1.35 billion in 9MFY19.
Meanwhile, he said CIMB Islamic’s PBT in 9MFY19 increased by 24.5 per cent y-o-y to RM945.3 million, driven by a strong 20.9 per cent growth in operating income and 59.2 per cent lower provisions.
“CIMB Islamic’s gross financing assets rose 8.5 per cent y-o-y to RM76.9 billion, accounting for 21.3 per cent of the banking group’s total gross loans,” he said.
Total deposits, including investment account, increased by 16.7 per cent y-o-y to RM86.5 billion with CIMB’s “Islamic First” initiative continuing to drive the business in Malaysia and Indonesia.
On performance by country, he said Malaysia saw a stronger performance at commercial and wholesale, partially offset by weaker consumer PBT, while non-Malaysia PBT contribution to the banking group stood at 34 per cent in 9MFY19.
“Indonesia’s PBT was 6.2 per cent higher y-o-y at RM963 million in 9MFY19 driven by stronger operating income, particularly from its consumer business, while underlying provisions remained steady,” he said.
He said Thailand’s PBT contribution of RM268 million was 18.8 per cent lower y-o-y from weaker trading income and higher overheads, while total PBT contribution from Singapore was 11.5 per cent higher y-o-y at RM359 million from better NIM.
Tengku Zafrul said CIMB Group has been investing for the future to ensure that it remained resilient and competitive.
“We are happy that the investments put in place, specifically in Touch ‘n Go, Philippines, Vietnam, and Thailand, have already shown encouraging results,” he said.
He said CIMB Philippines, through its digital banking proposition, has acquired more than a million customers within just 10 months of operations.
“CIMB Group’s asset quality has also improved significantly from enhanced risk management initiatives,” he said.
He said the banking group remained on track to meet its key financial targets while continuing to be vigilant on global uncertainties.
“Tangible progress has been made in all our Forward23-related investments to future proof the Group,” he said.
Going into 2020, Tengku Zafrul said CIMB Group would continue to make the necessary investments, particularly in its people and technology, to ensure the group’s resilience in anticipation of banking industry challenges. — Bernama