KUALA LUMPUR (Feb 26): CIMB Group Holdings Bhd’s net profit rose 10.56% to RM214.98 million in the fourth quarter ended Dec 31, 2020 (4QFY20), from RM194.44 million in the preceding quarter.
“This was driven by a 3.8% growth in net interest income (NII), while non-interest income (NOII) was 10.3% higher quarter-on-quarter, underpinned by improved trading and FX activity, as well as wealth management fees during the period,” the group said in its filing with Bursa Malaysia.
It said consumer banking posted a loss before tax of RM111 million, compared to a profit before tax of RM297 million in 3QFY20, predominantly due to management overlays.
Commercial banking, meanwhile, posted a pre-tax profit of RM58 million, compared to a loss before tax of RM127 million in 3QFY20, attributed to the lower provisions.
CIMB said wholesale banking’s pre-tax profit expanded 102% quarter-on-quarter, on the back of stronger treasury & markets operations and relatively flat provisions.
The group’s revenue was up 5.63% to RM4.72 billion, from RM4.46 billion in 3QFY20.
On a year-on year basis, the group saw a near four-fold decline in net profit from RM846.64 million in 4QFY19, hit by the lower profit recorded in the consumer banking segment. Revenue rose marginally by 4% from RM4.52 billion.
CIMB has declared an interim dividend of 4.81 sen, amounting to a total payout of RM477 million.
For the full-year period, the group’s net profit fell 74% to RM1.19 billion, from RM4.56 billion in FY19, due to elevated loan provisions arising from accounting adjustments incorporating macroeconomic factors and management overlay.
Full-year revenue dropped slightly to RM17.19 billion, from RM17.80 billion.
“Net-interest income grew marginally to RM12.73 billion year-on-year, despite a 14 bps decrease in net interest margin to 2.32% in FY20 due to the impact of lower interest rates and modification loss,” the group said.
Commenting on the group’s earnings, CIMB Group CEO Datuk Abdul Rahman Ahmad said the challenging operating environment in 2020 required the group to recalibrate its strategy and review all of its business segments.
“As part of our plan to mitigate the challenging environment and strengthen our balance sheet, our most immediate priority was cost management, and in this regard, we successfully surpassed our FY20 cost reduction target of 5% through rigorous cost optimisation measures,” he said in a statement.
Looking forward, CIMB expects a meaningful economic recovery in 2021 for all of its key operating markets.
“Enhanced risk management, prudent cost optimisation and targeted investments across the business will remain priorities, as we seek to drive efficient growth. With expected lower provisions, we anticipate considerably better financial performance in FY21.
“Moving forward, FY21 will be the first full year of our Forward23+ strategy. We recognise that disciplined execution will be crucial to its success and have developed the necessary core programmes from the strategic themes of Forward23+ to ensure delivery of specific and measureable business outcomes,” Abdul Rahman said.
CIMB also will continue to provide support to affected borrowers, amid the Covid-19 pandemic.
“We have provided financial payment relief assistance to around 150,000 individual & SME borrowers, amounting to RM19.43 billion, with an approval rate of virtually 100%,” he said.
Shares of CIMB finished unchanged at RM4.33, giving the group a market capitalisation of RM42.97 billion.