KUALA LUMPUR (May 26): CIMB Group Holdings Bhd saw its net profit jump 40.3% year-on-year (y-o-y) to RM813.8 million or 9.54 sen per share for the first quarter ended March 31, 2016 (1QFY16) from RM580.12 million or 6.9 sen per share in the previous year, on lower costs and provisions.

In a filing with the exchange today, the banking group's revenue or operating income for the period rose 1.2% to RM3.73 billion from RM3.68 billion a year prior.

"The group posted a respectable performance for 1QFY16 despite the difficult operating conditions across the region, with y-o-y improvements in our consumer, wholesale banking and group asset management and investments divisions," said CIMB group chief executive Tengku Datuk Seri Zafrul Aziz in a statement.

The group said net profit for the quarter improved 4% compared to the business as usual 1QFY15 net profit of RM782 million, attributed to its strict cost control initiatives and declining provision levels.

Segmentally, CIMB said its regional consumer bank's pre-tax profit gained 36% y-o-y in 1QFY16 to RM557 million, accounting for about half of the group's pre-tax profit, spurred by consumer loans growth across the region and lower consumer provisions.

Meanwhile, its commercial banking division registered a 22% y-o-y decline in pre-tax profits to RM146 million, due to higher provisions in Indonesia, Thailand and Singapore.

Its regional wholesale banking division saw a 25% y-o-y increase in profit, while the group's asset management and investments division saw 44% y-o-y growth.

Geographically, the group said profit contribution from its non-Malaysian operations increased to 26% compared with 20% in the previous year, due to better performance in Indonesia, in line with lower provisions at CIMB Niaga.

Thailand's contribution also saw improvement of 52% y-o-y, while its Singapore operations recorded a 42% fall in pre-tax profit.

In terms of key operating ratios, the group's loan to deposit ratio stood at 90.6% in 1QFY16 compared to 90.3% in 1QFY15, gross impaired loans ratio improved to 3% from 3.2%, while its cost to income ratio was lower at 57.4%, compared to 58% in the previous year.

Its net interest margins were lower at 2.62%, attributed to the higher cost of deposits in Malaysia. CIMB's total capital ratio stood at 15.4%, while the common equity tier 1 capital ratio strengthened to 10.6%.

Looking ahead, Tengku Zafrul said it will continue to adopt a cautious view on overall balance sheet growth, focusing on cost management, asset quality, capital management and governance, amid the challenging environment.

"We have made significant progress on various T18 programmes implemented in 2015, resulting in, among others, a firmer control of our operating expenses, as well as an improved CET1 ratio of 10.6%.

"For the rest of 2016, we expect a slower growth environment at CIMB Malaysia. We also foresee a gradual improvement at CIMB Niaga through the year. Thailand and Singapore will see selective growth areas, coupled with close monitoring of asset quality," said Tengku Zafrul.

CIMB gained one sen or 0.23% to close at RM4.37 for a market capitalisation of RM38.23 billion.