KUALA LUMPUR, May 21 — CIMB Group Holdings Bhd’s net profit for the first quarter ended March 31, 2020 (Q1 2020) declined by more than half to RM507.93 million from RM1.19 billion in the same quarter last year.
Revenue eased to RM4.14 billion from RM4.17 billion a year ago.
In a statement today, the group attributed its performance to lower non-interest income (NOII) and higher provisions across selected markets.
“Loan growth stayed healthy across all markets, and our current account and savings account ratio improved significantly to 36.5 per cent.
“Profitability was, however, impacted by volatile trading conditions, lower foreign exchange (FX) income and isolated credits, which gave rise to increased provisioning in selected markets,” CIMB said.
Overall, the group said it saw steady loan growth of 3.8 per cent year-on-year (y-o-y) with commendable performance across all core markets.
The group’s Q1 2020 operating income remained steady at RM4.14 billion, with net interest income expanding by 4.8 per cent y-o-y and a marginally lower net interest margin of 2.44 per cent, it said.
However, it said 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 Q1 2020.
The group’s total deposits were 3.9 per cent higher y-o-y, mainly contributed by its strong performance in Singapore (+17.7 per cent) and Thailand (+13.4 per cent).
CIMB said its Consumer Banking segment’s pre-tax profit (PBT) was 8.5 per cent lower at RM528 million, while its Commercial Banking segment performed well operationally, recording a 4.0 per cent growth in operating income, although its PBT was impacted by increased provisions.
The group’s Wholesale Banking division’s PBT fell by 84.7 per cent y-o-y to RM74 million, due to significantly weaker capital markets in March.
However, the group said CIMB Islamic’s Q1 2020 PBT rose by 3.1 per cent to RM256 million, driven by a strong 19.7 per cent growth in operating income, with gross financing assets rising by 8.0 per cent to RM79.9 billion, accounting for 22.0 per cent of the group’s total gross loans.
Meanwhile, CIMB Malaysia’s PBT fell by 33.4 per cent for the quarter due to weaker trading and FX income, higher provisions from consumer banking and lower NII from the two Overnight Policy Rate cuts in Q1 2020.
The group expects continued challenges for the rest of the year.
“However, we are confident that the banking system is far more resilient today, given the lessons learnt from previous crises, and the reforms put in place as a result.
“This includes a better capitalised banking sector with sufficient buffers to be able to withstand the negative shocks of Covid-19,” it said.
Moving forward, CIMB said it will focus on engaging with customers in vulnerable segments, managing asset quality and enhancing risk management for the rest of the year.
“Loan growth and capital market activity is expected to decelerate in line with weaker economic activity across all operating jurisdictions.
“The challenging operating conditions are also expected to translate to an increase in loan provisions for most businesses,” it added. — Bernama