KUALA LUMPUR: CIMB Group Holdings Bhd saw its net profit slip 8.7% to RM1.19bil for the first quarter ended March 31 (1Q19), as compared with RM1.3bil in the same quarter last year in the absence of one-off disposal gain last year.
The bank group reported a pre-tax profit (PBT) of RM1.6bil during the quarter, down 8% year-on-year (YoY) due to lower operating income and a 7.5% increase in operating expenses, partially offset by a 25.2% YoY decline in loan loss provisions.
Revenue for the quarter stood at RM4.16bil against RM4.3bil in the same period a year ago. Its earnings per share stood at of 12.5 sen and an annualised return on average equity (ROE) of 9.2% during the quarter.
"Although our PBT declined by 8.0% YoY to RM1.60bil, the quarter-on-quarter (QoQ) performance improved by 6.0%. This was achieved amid a challenging operating landscape in our key markets. The QoQ performance was supported by better operating income in 1Q19, driven by stronger performances in Thailand and Singapore.
"Our ROE came in at 9.2%, and we are pleased that our CET1 strengthened to 12.8% while loan loss charge improved to 0.34%," Group CEO Tengku Datuk Seri Zafrul Aziz said in a statement Wednesday.
"We expect the rest of 2019 to remain challenging, amidst fresh trade tensions and other macroeconomic headwinds, coupled with tougher operating conditions in our major markets.
"However, we are confident that Forward23, our newly launched strategic growth plan, will accelerate growth and future-proof CIMB, particularly through investments in customer experience, our people and technology," Zafrul said.
CIMB said its 1Q19 operating income was 3.2% lower YoY at RM4.17bil due to a 19.3% decline in non-interest income. This was attributed to the absence of the RM152mil one off gain from the sale of 50% of CIMB Securities International in 1Q18 as well as lower bancassurance and wealth management fees, partially offset by a 4.3% YoY growth in net interest income on the back of a 7.6% loans growth
Its operating expenses rose 7.5% YoY from incremental investments and Forward23-related expenses, resulting in the group's cost-to-income ratio (CIR) registering at 55.3% in 1Q19. With a 25.2% YoY decline in loan loss provisions, the group's PBT was 8.0% lower YoY at RM1.60bil.
CIMB said its consumer banking PBT declined 22.0% YoY in 1Q19 to RM583mil from weaker non-interest income attributed to lower bancassurance and wealth management fee income, and higher operating expenses.
Commercial banking PBT rose by 154.8% YoY to RM321mil as a result of its regional recalibration, which brought about a 6.4% YoY loan growth and 82.4% decline in provisions.
PBT at the group's wholesale banking division declined 17.0% YoY to RM477mil as the improved capital market revenue was offset by increased operating expenses and higher loan provisions.
The bank said son-Malaysia PBT contribution to the group rose to 45% in 1Q19 compared to 28% in 1Q18 from stronger performances in Indonesia and Thailand.
The group's total gross loans grew by 7.6% YoY while total deposits were 5.6% higher YoY. The loan to deposit ratio (LDR) stood at 91.4%, compared to 89.7% as at end-March 2018.
Its gross impairment ratio stood at 3.0% as at end-March 2019, with an allowance coverage of 103.5%. The group's CIR stood at 55.3% compared with 49.8% in 1Q18 from higher operating expenses and lower revenues.
The group's net interest margin was lower at 2.48% due to spread compression in Malaysia and Thailand.
As at March 31, CIMB Group's total capital ratio stood at 16.2% while the Common Equity Tier 1 (CET1) capital ratio stood at 12.8%.