KUALA LUMPUR (April 22): CIMB Group Holdings Bhd is allotting RM900 million capital expenditure (capex) for the financial year ending Dec 31, 2019 (FY19), which will be used to enhance its information technology (IT) and operations.

In comparison, the bank has spent some RM500 million last year on a business-as-usual (BAU) basis.

"Basically, under our Forward23 program we have incremental expenditure of 4% which translates to about RM400 million increase in costs related to IT," said its group chief executive officer Tengku Datuk Seri Zafrul Aziz after the group's annual general meeting here today.

"This would be on top of the RM500 million we would spend on a BAU basis. So, effectively it is over 60% increase for this year," he added.

Zafrul told reporters that this is the reason the bank is expecting a flat return-on-equity (ROE) of 12% for FY19.

Nearly four months into the year, Zafrul noted that the bank is still maintaining its loan growth target of 6% to 7% in Malaysia.

"We are quite cautiously optimistic that we will achieve the target given the performance that we have seen in the first quarter," said Zafrul, adding that the bank is dependent on the performance of the general economy of Malaysia, which is still expected to grow at 4.5%.

Other key targets for FY19 is cost-to-income ratio at about 45%, and common equity tier 1 (CET1) at 13%.

Additionally, Zafrul said the bank will be planning for at least three initial public offerings (IPOs) by the end of this year, versus none in 2018.

At the midday break, shares of CIMB were up 10 sen or 1.97% at RM5.17, bringing its market capitalisation to RM49.64 billion.