KUALA LUMPUR: CIMB GROUP HOLDINGS BHD’s net profit slipped 8.7% to RM1.19bil for the first quarter ended March 31 (1Q19) 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 (y-o-y) due to lower operating income and a 7.5% increase in operating expenses, partially offset by a 25.2% y-o-y 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% y-o-y to RM1.6bil, the quarter-on-quarter (q-o-q) performance improved by 6.0%. This was achieved amid a challenging operating landscape in our key markets. The q-o-q 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 chief executive officer Tengku Datuk Seri Zafrul Aziz said in a statement yesterday.
“We expect the rest of the year to remain challenging, amid 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,” Tengku Zafrul said. CIMB said its 1Q19 operating income was 3.2% lower y-o-y 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% y-o-y growth in net interest income on the back of a 7.6% loans growth
Its operating expenses rose 7.5% y-o-y 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% y-o-y decline in loan loss provisions, the group’s PBT was 8.0% lower y-o-y at RM1.60bil.
CIMB said its consumer banking PBT declined 22.0% y-o-y 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% y-o-y to RM321mil as a result of its regional recalibration, which brought about a 6.4% y-o-y loan growth and 82.4% decline in provisions.