CIMB Niaga posts stronger 1H18 profit as non-interest income rises while provision expenses decline

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KUALA LUMPUR (Aug 15): PT CIMB Niaga Tbk, a 92.5%-owned Indonesian arm of CIMB Group Holdings Bhd, today reported a 28.1% year-on-year (y-o-y) rise in its consolidated net profit to IDR1.8 trillion 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 an earnings per share of IDR70.54. NII grew 32.6% to IDR1.9 trillion, 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 IDR1.8 trillion. 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 IDR260.1 trillion 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 IDR185.7 trillion.

“Of the total loans, consumer loans stood at IDR47.9 trillion (26%), with Micro Small Medium Enterprise (“MSME”) loans at IDR35.8 trillion (19%). Wholesale banking comprised the largest proportion of the loan book, with corporate loans at IDR70 trillion (38%), and commercial loans at IDR32 trillion (17%),” CIMB Niaga said.

“Our strategy to focus on the mortgage and Small Medium Enterprise (“SME”) segments 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 IDR190.3 trillion as at June 30, 2018, underpinned by a 12.8% y-o-y growth in current account and savings account (CASA).

Meanwhile, CIMB Niaga said the bank continues to innovate by developing digital-based products in order to expand its customer excellence network, to complement the services available from existing branch offices.

“As at 30 June 2018, 93.5% of the total transactions by customers were made through digital banking channels such as CIMB Clicks, Go Mobile, ATMs and Rekening Ponsel (mobile wallet),” it added.

In the syariah banking segment, CIMB Niaga's Islamic Business unit’s (CIMB Niaga Syariah) total financing stood at IDR21.3 trillion, up 56.4% y-o-y, with third party deposits of IDR19.7 trillion — 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. “Going forward, we will continue to optimise CASA with our consumer and SME digitalisation, and strengthen our syariah business proposition and syariah-compliant product offerings,” Tigor said.