CIMB Group's 1Q net profit is halved to RM507.93 mil
By FocusM |   |  Featured, Mainstream

KUALA LUMPUR: CIMB Group Holdings Bhd’s net profit for the first quarter ended March 31, 2020 declined by more than half to RM507.93 mil from RM1.19 bil in the same quarter last year.

Revenue eased to RM4.14 bil from RM4.17 bil a year ago.

In a statement today, the group attributed its performance to lower non-interest income (NOII) and higher provisions across selected markets.

“Loan growth stayed healthy across all markets, and our current account and savings account ratio improved significantly to 36.5%. Profitability was, however, impacted by volatile trading conditions, lower foreign exchange (FX) income and isolated credits, which gave rise to increased provisioning in selected markets,” CIMB said.

Overall, the group said it saw steady loan growth of 3.8% year-on-year (yoy) with commendable performance across all core markets.

The group’s 1Q20 operating income remained steady at RM4.14 bil, with net interest income expanding by 4.8% yoy and a marginally lower net interest margin of 2.44%, it said.

However, it said NOII declined by 15.5% yoy largely due to weaker trading and FX income from markets adversely impacted by Covid-19 at the tail-end of 1Q20.

The group’s total deposits were 3.9% higher yoy, mainly contributed by its strong performance in Singapore (+17.7 %) and Thailand (+13.4%).

CIMB said its consumer banking segment’s profit before tax (PBT) was 8.5% lower at RM528 mil, while its commercial banking segment performed well operationally, recording a 4% growth in operating income, although its PBT was impacted by increased provisions.

The group’s wholesale banking division’s PBT fell by 84.7% yoy to RM74 mil, due to significantly weaker capital markets in March.

However, the group said CIMB Islamic’s 1Q20 PBT rose by 3.1% to RM256 mil, driven by a strong 19.7% growth in operating income, with gross financing assets rising by 8% to RM79.9 bil, accounting for 22% of the group’s total gross loans.

Meanwhile, CIMB Malaysia’s PBT fell by 33.4% for the quarter due to weaker trading and FX income, higher provisions from consumer banking and lower NII from the two Overnight Policy Rate cuts in 1Q20.

The group expects continued challenges for the rest of the year.

“However, we are confident that the banking system is far more resilient today, given the lessons learnt from previous crises and the reforms put in place as a result.

“This includes a better capitalised banking sector with sufficient buffers to be able to withstand the negative shocks of Covid-19,” it added.

Moving forward, CIMB said it will focus on engaging with customers in vulnerable segments, managing asset quality and enhancing risk management for the rest of the year.

“Loan growth and capital market activity is expected to decelerate in line with weaker economic activity across all operating jurisdictions.

“The challenging operating conditions are also expected to translate to an increase in loan provisions for most businesses,” it added. - May 22, 2020, Bernama

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