Tengku Datuk Seri Zafrul Aziz said the markets would quickly factor in any positive or negative impact from the election.
KUALA LUMPUR: CIMB Group Holdings Bhd
posted higher net profit in the first quarter ended March 31, 2018 on lower operating expenses and a decline in loan loss provisions.
It announced on Wednesday its net profit rose 10.6% to RM1.30bil from RM1.18bil. Profit before tax rose 8% to RM1.74bil from RM1.61bil on lower operating expenses of 6.8% year-on-year and a 5.4% tear-on-year decline in loan loss provisions.
“Operating income was 1.3% lower on-year from lower net interest income and the deconsolidation of CIMB Securities International (CSI), partially offset by a RM152mil gain arising from the CSI sale.
“The group’s 1Q18 net profit improved 10.7% on-year to RM1.31bil, translating into a net earnings per share (EPS) of 14.2 sen and an annualised return on average equity (ROE) of 10.2%,” it said.
Tengku Datuk Seri Zafrul Aziz, the group CEO of CIMB Group said the higher net profit was due to sustained cost discipline, lower provisions and a RM152mil gain from the disposal of 50% of CSI.
“Commercial banking’s recalibration is progressing well, while the wholesale banking business tracked weaker capital markets in 1Q18. Consumer banking, however, had a great start, posting a 51.2% year-on-year profit before tax growth.
“Our capital position is solid even after adoption of MFRS9, with a CET1 of 11.7%. The cost to income ratio improved to 49.8%, below our 50% year-end target, as operating expenses remained under control across all segments,” he said.
CIMB Group’s consumer bank profit before tax (PBT) was 51.2% higher on-year in the first quarter at RM848mil, which made up 49% of the group's PBT.
Consumer revenue growth was driven by a robust non-interest income performance, with net interest income growing steadily and costs remaining well managed.
The PBT of the commercial banking fell 14.1% on-year in line with the regional business recalibration with the lower revenue partially offset by a decline in costs and provisions.
PBT at the group’s wholesale banking division was RM490mil or 32.6% lower on-year largely due to the comparatively weaker capital market activity in 1Q18.
Group asset management and investments (GAMI) PBT improved 66.7% on-year from better performances in the asset management and private markets businesses. Group funding PBT increased 50.7% on-year from the gain arising from the sale of 50% of CSI.
Non-Malaysia PBT contribution to the group declined to 31% in Q1, FY18 compared to 34% in 1Q17.
Indonesia’s PBT decreased 6.5% on-year to RM273mil. However, excluding forex translation effects, Indonesia’s PBT expanded 7.7% on-year in line with CIMB Niaga’s improving performance.
Thailand's PBT contribution of RM108mil was a 5.9% on-year increase due to lower provisions.
Total PBT contribution from Singapore was 10.9% lower on-year at RM122mil from weaker treasury and markets.
CIMB Group's total gross loans (excluding the bad bank) grew by 0.5% on-year (+5.3% excluding forex effects), while total deposits were 2.7% higher on-year. The group’s loan to deposit ratio (LDR) stood at 89.7% compared to 91.7% in 1Q17.
The group’s gross impairment ratio stood at 3.2% as at end-March 2018, with an allowance coverage of 105.3%.
The group’s cost-to-income Ratio improved to 49.8% compared with 52.6% in 1Q17, in line with continued cost management. The group’s net interest margin (NIM) was lower at 2.57% attributed to the NIM contraction at CIMB Niaga.
CIMB Group said on a quarter-on-quarter basis, the Q1, FY18 operating income was 4.7% lower at RM4.30bil from the 10.3% and 1.9% respective declines in non-interest income and net interest income.
Its consumer banking PBT rose 30.1% on-quarter from a combination of improved revenue and lower costs and provisions.
The commercial banking PBT jumped 390.5% on-quarter due to improved provisions.
Wholesale banking PBT fell 32.1% on-quarter largely attributed to the weaker capital markets during the period.
GAMI PBT increased 62.2% due to better performance in the asset management and private markets businesses, while the gain from the sale of 50% of CSI brought about the 34.3% increase in group funding PBT.
The group’s 1Q18 net profit was 23.2% higher on-quarter owing to lower operating expenses and provisions.
