CIMB Group posts 81.6pc lower net profit in 2Q20

A logo of Malaysia's CIMB Bank is on display outside its branch in Kuala Lumpur February 7, 2013. — Reuters pic
A logo of Malaysia's CIMB Bank is on display outside its branch in Kuala Lumpur February 7, 2013. — Reuters pic

KUALA LUMPUR, Aug 28 — CIMB Group Holdings Bhd’s net profit plunged 81.6 per cent to RM277.07 million in the second quarter ended June 30, 2020 from RM1.51 billion in the same quarter last year on the back of modification loss during the period and higher provisions.

Group chief executive officer Datuk Abdul Rahman Ahmad said revenue of the banking group fell to RM3.87 billion during the quarter under review from RM4.47 billion previously.

“The weaker performance was due to the challenging economic environment caused by the Covid-19 pandemic, which led to the modification loss arising from the moratorium given to borrowers, as well as elevated provisions due to macroeconomic factors and specific credit provisioning,” he told a virtual press conference on the group’s financial performance here today.

Abdul Rahman, however, said the group’s underlying business remained resilient, with loans and deposits growing positively by 3.9 per cent year-on-year (y-o-y) to RM 369.9 billion and 7.8 per cent y-o-y to RM419.5 billion, respectively, thus driving net interest income to grow by 6.0 per cent y-o-y to RM6.4 billion, excluding modification loss impact.

He said operating income declined by 7.3 per cent, while operating expenses reduced by 3.3 per cent y-o-y.

Moving forward, Abdul Rahman said the weaker financial performance is expected to continue for the remainder of 2020 in line with uncertain economic conditions, as the group recognises elevated provisions arising from the impact of macroeconomic factors under the Malaysian Financial Reporting Standard 9.

The group would also take impairments on specific accounts outside Malaysia to strengthen its financial position, he said.

To mitigate the impact of the challenging economic environment, he said the group is undertaking an aggressive cost rationalisation measure of around RM500 million or 5.0 per cent for full year 2020.

For the first half of this year, the cost on an absolute basis declined by 3.3 per cent.

“The group will continue to be prudent and maintain the utmost discipline in managing both risk and asset quality,” he said.

Abdul Rahman said CIMB Group’s priority remains on supporting customers affected by the pandemic, especially in Malaysia, as the country is approaching the end of the blanket moratorium in September.

He said the group is committed to continue providing extended relief and support to affected customers through its Targeted Assistance Programme (TAP), which as at end-June, has benefited over 1.25 million retail customers and around 16,000 small and medium enterprises and corporate clients in terms of cash-flow alleviation.

The group’s support for affected customers in Malaysia would continue post-moratorium via its Covid-19 financial assistance TAP, in line with the government’s extended Covid-19 relief initiatives, he added. — Bernama

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