KUALA LUMPUR (Feb 28): CIMB Group Holdings Bhd’s net profit for the fourth quarter ended Dec 31, 2021 (4QFY21) jumped close to four times to RM854.51 million from RM214.98 million a year ago, due to significantly lower provisions.
Its revenue for 4QFY21, however, fell 1.68% to RM4.59 billion from RM4.67 billion a year ago, its filing with Bursa Malaysia showed.
For the full year ended Dec 31, 2021 (FY21), the group’s net profit also surged nearly four-fold to RM4.3 billion from RM1.19 billion a year earlier, while its revenue climbed 14.87% to RM19.51 billion from RM16.99 billion.
The group proposed a second interim dividend of 12.55 sen per share, bringing the total proposed annual dividend for FY21 to 22.99 sen per share for a payout ratio of 50% of core net profit, in line with the group’s dividend policy.
The group said in a statement that the FY21 performance translates to a core annualised return on average equity (ROE) of 8.1% and core earnings per share of 46.4 sen.
The improved year-on-year (y-o-y) performance was driven by higher operating income with recovery across all segments and markets, and further supported by strong cost controls and significantly lower provisions, it said.
Its FY21 core operating income expanded 8.2% y-o-y to RM18.37 billion; out of this, net interest income grew by 11.5% to RM13.96 billion, largely driven by net interest margin expansion and rebounding loan growth at 3.3% y-o-y.
CIMB said its core cost-to-income ratio stood at 48.6% for FY21 from 51.7% in FY20, with core operating expenses only rising 1.8% y-o-y to RM8.94 billion.
Meanwhile, its core total provisions decreased by 53.6% y-o-y to RM3.16 billion from reduced overlays and non-retail provisions. CIMB also noted that the group’s allowance coverage rose to 100.2% excluding the regulatory reserve as at end-FY21 compared to 91.6% the previous year, while the gross impaired loans ratio declined marginally to 3.5% as at Dec 21. The annualised loan loss charge improved to 0.73% in FY21 compared to 1.51% in FY20, it added.
In view of the ongoing assessment and recovery measures on the processing error that occurred in late January, the group said it has prudently provided for the majority of the exposure with an expected credit loss of RM280.9 million in FY21.
Notwithstanding the provisions, CIMB noted that it met or exceeded its FY21 targets across all profitability metrics, including ROE, cost income ratio (CIR) and credit cost/provisions.
According to CIMB, the FY21 reported net profit includes the net impact of all exceptional items recognised in FY21 which collectively amount to a post-tax net charge of RM353 million.
This comprises, among others, the non-cash, non-recurring impairment of goodwill on CIMB Thai of RM1.22 billion recorded in 3QFY21 and RM481 million in transformational costs, intangible assets write-off and accelerated amortisation incurred for FY21, which were partially offset by the positive gain on the deconsolidation of TNG Digital of RM1.16 billion recorded in 1QFY21 and deferred tax asset gain on Cukai Makmur of RM118 million recognised in 4QFY21.
While the outlook remains mixed and uncertain due to pandemic-related developments such as the Omicron variant, the group’s chief executive officer Datuk Abdul Rahman Ahmad believes the economies the group operate in will show further recovery in 2022 due to the significant progress of vaccination programmes and the opening up of economic activities.
“We are also hopeful of the progressive migration of customers out of repayment assistance over the year,” he said.
At the same time, he said the group will continue to assist those still impacted customers through programmes such as the Financial Management and Resilience Programme (URUS) together with Agensi Kaunseling dan Pengurusan Kredit (AKPK) as it remains committed to helping all impacted customers navigate out of this pandemic.
“Our sound financial position will enable us to continue doing right by our customers as we help the economy and our customers rebuild post-pandemic through our enhanced lending activities,” he added.
He also said the group’s priority remains on executing its Forward23+ strategic plan to build on its positive growth momentum, supported by a focused approach in making the necessary investments into its areas of growth such as affluent and wealth management, transaction banking and ASEAN network business.
A key focus investment area, according to him, is technology and operations, where the group plans to invest close to RM1.2 billion in FY22 as it commits to accelerating its digital transformation and further strengthen its technology and operational resilience.
In addition, he said the group will intensify efforts to advance its environmental, social and governance (ESG) agenda, in line with the group’s commitment to mobilise RM30 billion in sustainable finance by 2024.
“Based on this, the group’s key headline targets for FY22 include core ROE of 8.5% to 9%, loan growth of 5% to 6%, CIR of below 49% and maintaining our common equity tier 1 (CET1) ratio above 13%,” he said.
However, he noted that the group’s reported ROE performance will likely be sustained at 7% to 8%, affected by the one-off Cukai Makmur introduced in Malaysia for 2022.
CIMB closed four sen or 0.71% higher at RM5.71 on Monday, valuing the group at RM57.96 billion.
Over the past one year, the counter has risen 35.31%.