KUALA LUMPUR (Aug 28): CIMB Group Holdings Bhd's net profit decreased 33% on-year to RM639.75 million in the second quarter ended June 30, 2015 (2QFY15) from RM949.94 million a year earlier. Profit drop came mainly on significantly higher bad loan allowance.

Revenue grew to RM3.83 billion from RM3.41 billion, CIMB (fundamental: 1.05; valuation: 2.25) told the exchange today.

In notes accompanying its results, CIMB said bad loan allowance jumped to RM528.95 million from RM147.18 million. The group also set aside RM9.38 million for commitments and contingencies in 2QFY15.

1HFY15 net profit declined to RM1.22 billion from RM2.02 billion a year earlier while revenue grew to RM7.51 billion from RM6.95 billion. The group proposed a dividend of three sen a share for the quarter in review.

In a separate statement, CIMB group chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz said the bank posted a “respectable” 1HFY15 performance in an increasingly challenging operating environment.

Moving forward, Tengku Zafrul said 2015 was turning out to be a testing year for the financial services industry and CIMB was continuing its cautious stance amid moderation in regional economies and softer capital markets.

“It is timely that we are on track in recalibrating our organisation to be leaner and more efficient," he said.

In geographical terms, he said CIMB's Malaysian operations remained robust, but the group was mindful of potentially slower domestic consumption.

CIMB also has operations in Singapore, Thailand and Indonesia.

“CIMB Singapore continues to perform well as our businesses expand. Economic conditions may give rise to some challenges at CIMB Thai while asset quality concerns will remain a factor in CIMB Niaga on the back of continued economic uncertainty,” Tengku Zafrul said.

At 5pm, CIMB shares closed 12 sen or 2.5% higher at RM5 for a market capitalisation of RM42.45 billion.

The stock saw some 15 million shares done.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)