CIMB Niaga 1H19 profit up 11.8% as net interest margin improves

This article first appeared in The Edge Financial Daily, on August 16, 2019.
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KUALA LUMPUR: CIMB Group Holdings Bhd’s 92.5% subsidiary PT Bank CIMB Niaga Tbk reported yesterday an 11.8% rise in net profit to 1.98 trillion Indonesian rupiah (RM580.82 million) for the first half of 2019 (1H19), from 1.78 trillion rupiah for the same period a year ago.

In a statement filed with Bursa Malaysia yesterday, CIMB Niaga said the improved net profit came on the back of a 5.5% increase in net interest income (NII) to 6.32 trillion rupiah from 5.99 trillion rupiah, and a 2% year-on-year (y-o-y) decline in provision expenses. Loan loss coverage, it said, remained at a comfortable 101.2%. Total loans grew 2.6% y-o-y to 190.5 trillion rupiah, mainly from growth in mortgages, credit cards, and small medium enterprise (SME) loans, with each segment growing 13.5%, 10% and 4.1% y-o-y respectively, while corporate loans grew by 2.1% y-o-y.

Total third-party deposits stood at 197.85 trillion rupiah, with the current account savings account (Casa) ratio at 53.9%.

“We are pleased to announce continued improvement in our financial performance for 1H19. The 5.7% y-o-y operating income growth was mainly driven by a 5.5% growth in NII, underpinned by a stronger net interest margin of 5.41% for 1H19 (1H18: 5.09%). We will continue our prudent approach to loan growth, with the focus on asset quality as our top priority,” said CIMB Niaga president director Tigor M Siahaan.

As for its syariah banking segment, CIMB Niaga said total financing at its Islamic business unit (CIMB Niaga Syariah) stood at 27.96 trillion rupiah, up 31.6% y-o-y as at June 30, while third-party deposits were at 27.17 trillion rupiah, up 37.6% y-o-y. Going forward, CIMB Niaga said it will continue to focus on expanding consumer and SME businesses, building its Casa franchise, and strengthening its syariah business proposition and syariah-compliant product offerings.