This article first appeared in The Edge Financial Daily on November 1, 2018

KUALA LUMPUR: The growth in non-interest income and a decline in provisions boosted the net profit of PT Bank CIMB Niaga Tbk by 18% to 2.6 trillion rupiah (RM715.7 million) for the first nine months ended Sept 30 (9MFY18) from 2.2 trillion rupiah in the corresponding period last year.

The 92.5%-owned Indonesian banking unit of CIMB Group Holdings Bhd attributed the stronger net profit to a 23.6% year-on-year (y-o-y) growth in non-interest income to 2.9 trillion rupiah and a 26.8% decline in provision expenses.

In a statement yesterday, CIMB Niaga said its loan loss coverage remained comfortable at 101.24%.

“Our 9M18 performance improved from a year ago with asset quality as our main priority, while we craft a prudent growth strategy in the midst of a competitive market.

“The 9M18 operating income grew by 1.6% y-o-y, mainly driven by non-interest income. Despite the challenging economic and market environment, we managed to lower our provisions by 26.8% y-o-y resulting in an 18% y-o-y growth in net profit to 2.6 trillion rupiah,” said CIMB Niaga president director Tigor M Siahaan.

As at 9MFY18, total assets grew by 3.4% to 260.6 trillion rupiah, elevating it to the second largest bank by assets in Indonesia.

   As at Sept 30, 93.8% of the total transactions by customers were made through digital banking channels such as CIMB Clicks, Go Mobile, automated teller machines and Rekening Ponsel (mobile wallet).

In the syariah banking segment, its Islamic business unit’s total financing stood at 24.1 trillion rupiah, up 62.5% y-o-y, with third-party deposits of 22 trillion rupiah higher by 30.3%.

This segment continues to gain positive momentum, posting a 45.2% growth in profit before tax to 523.5 billion rupiah.

Its  capital adequacy ratio stood at 19.41% as at 9MFY18, representing a 45-basis point increase from the same period last year.