CIMB Niaga posts stronger 1H18 profit on the back of higher NII

This article first appeared in The Edge Financial Daily, on August 16, 2018.
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KUALA LUMPUR: PT CIMB Niaga Tbk, a 92.5%-owned Indonesian arm of CIMB Group Holdings Bhd, yesterday reported a 28.1% year-on-year (y-o-y) rise in its consolidated net profit to 1.8 trillion rupiah (RM502.98 million) for the first half of 2018 (1H18), on the back of higher non-interest income (NII) and lower provision expenses.

The stronger net profit translated into earnings per share of 70.54 rupiah. NII grew 32.6% to 1.9 trillion rupiah, while provision expenses fell 27.1%, CIMB Niaga said in a statement.

“Our 1H18 performance continued to improve. The operating income managed to grow by 1.5% y-o-y, mostly due to the 32.6% y-o-y improvement in NII.

“Operating costs continued to be well managed, rising only 3.4% y-o-y, while the gradual improvement in the economic environment positively impacted our provisions, which declined 27.1% y-o-y. This brought about a 28.1% y-o-y growth in net profit to 1.8 trillion [rupiah]. We will continue the cautious growth trajectory with asset quality as a priority,” said CIMB Niaga president director Tigor M Siahaan in the same statement.

The bank maintained its position as Indonesia’s second-largest national private-listed bank by assets, with total assets of 260.1 trillion rupiah as at June 30, 2018, representing a 7.6% y-o-y growth. As at June 30, 2018, its total gross loans increased 3% y-o-y to 185.7 trillion rupiah.

“Of the total loans, consumer loans stood at 47.9 trillion rupiah (26%), with micro small and medium enterprise loans at 35.8 trillion rupiah (19%). Wholesale banking comprised the largest proportion of the loan book, with corporate loans at 70 trillion rupiah (38%), and commercial loans at 32 trillion rupiah (17%),” CIMB Niaga said.

“Our strategy to focus on the mortgage and small and medium enterprise segment is gaining traction, with each segment growing by 8.9% and 6.2% y-o-y respectively, while our corporate loans grew by 8.8% y-o-y,” Tigor added.

The bank’s total third-party deposits stood at 190.3 trillion rupiah as at June 30, 2018, underpinned by a 12.8% y-o-y growth in current account and savings account (Casa).

In the syariah banking segment, CIMB Niaga’s Islamic Business unit’s total financing stood at 21.3 trillion rupiah, up 56.4% y-o-y, with third-party deposits of 19.7 trillion rupiah — up 59.6% y-o-y — as at June 30, 2018.

The syariah business segment continues to gain positive momentum — now making up 11.4% of the bank’s total loans from 7.5% in the previous year and 10.4% of the bank’s total deposits from 7.1% last year, said CIMB Niaga.