CIMB net profit stays above RM1.01 bil in 3Q despite higher expenses and provision

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KUALA LUMPUR (Nov 22): CIMB Group Holdings Bhd’s net profit fell 14.36% to RM1.01 billion for the third-quarter ended Sept 30, 2019 (3QFY19), from RM1.18 billion a year earlier, due to higher operating expenses and provisions, despite an increase in operating income. 

Quarterly operating income increased 12% year-on-year (y-o-y) to RM4.64 billion from RM4.14 billion, on the back of stronger capital market-driven non-interest income (NOII), according to the group’s filing with Bursa Malaysia. 

The group’s revenue rose 12.03% to RM4.64 billion, from RM4.14 billion, it said.  

For the nine-month period (9MFY19), CIMB’s net profit dropped 16.91% to RM3.71 billion from RM4.47 billion in the previous corresponding period, while revenue eased marginally by 0.26% to RM13.27 billion from RM13.31 billion.  

CIMB group chief executive officer Tengku Datuk Seri Zafrul Aziz said he is pleased to see that the group’s underlying performance remained strong, despite the challenging environment. 

“The better performance was driven by higher net interest income and non-interest income, coupled with lower provisions,” he said in a press statement. 

“Our balance sheet growth remained strong with loans and deposits growing steadily, driven by our Malaysian consumer business,” he added. 

The group recorded a strong operating income (+7.2% y-o-y) at RM13.27 billion in 9MFY18, underpinned by growth in net interest income (NII) and NOII. 

NII grew 5.0% y-o-y to RM9.31 billion from the 5.6% loan growth, while the 12.8% improvement in NOII to RM3.96 billion came largely on the back of improved capital market activity, the group said. 

It added that net interest margin (NIM) slightly declined to 2.47% in 9MFY19 (2.52% in 9MFY18), mainly from the spread compression in Malaysia and Thailand.  

Meanwhile, the group’s total gross loans grew by 5.6% y-o-y, with strong growth posted by Thailand (+9.0%) and Malaysia (+4.5%). 

Total deposits were 7.3% higher y-o-y, contributed by Malaysia (+8.9%) and Thailand (+6.1%). The loan to deposit ratio (LDR) stood at 91.6% (93.1% at Sept 18), reflecting a strong liquidity position, with CASA (current and savings account) ratio strengthening to 34.3%. 

The group’s gross impairment ratio stood at 3.2% as at end-Sept 2019, with an allowance coverage of 94.8%. 

“The group has been investing for the future to ensure we remain resilient and competitive,” Tengku Zafrul said.

“We are happy that the investments put in place, specifically in Touch ‘n Go, Philippines, Vietnam and Thailand, have already shown encouraging results,” he said. 

CIMB Group’s share price closed one sen or 0.19% lower at RM5.37 today, valuing the group at RM53.29 billion.