KUALA LUMPUR: CIMB Group Holdings Bhd made RM2.46bil in net profit in the first quarter on improved operating income, but the bank remained cautious about its outlook amid the resurgence of new Covid-19 cases and fresh lockdown imposed by the government to the spread of the virus.
Core operating income grew 15.9% to RM4.8bil in the three-month ended March 31, the CIMB said in a statement today.
Net interest income from its traditional banking business grew by 8% to RM3.47bil driven by improved net interest margins (NIM) in Malaysia and Indonesia.
Core non-interest income strengthened by 43.2% to RM1.33bil, driven by stronger wealth management and trading income.
The group said its core pre-provisioning operating profit strengthened by 35% to RM2.46bil from RM1.83bil a year ago, while core net profit expanded 156.1% to RM1.3bil.
The performance translates to a core annualised return on average equity (ROE) of 9.3%.
"While it may be too early to tell given the pandemic’s resurgence causing ongoing risk to economic recovery, the positive start to FY21 signals that we are moving in the right direction on our Forward23+ strategic plan.” CEO Datuk Abdul Rahman Ahmad said.
Loan growth during the quarter was muted, up 0.7% due to a combination of the soft economic environment and shift in the Group’s portfolio mix.
The bank said it continued to undertake stringent cost optimisation measures and with lower total provisions which decreased by a third to RM756mil mainly due to recoveries in legacy accounts and the absence of large impairments, CIMB saw significantly improved underlying profitability.
CIMB recorded strong reported net profit of RM2.46bil, including a one-off revaluation gain of RM1.16bil from the deconsolidation of TNG Digital.
Including this revaluation gain, the Group registered a reported operating income of RM5.96bil.
"CIMB Group remain cautious in view of downside risks in the short- term, particularly given the ongoing resurgence of Covid-19 cases and imposition of movement restrictions in Malaysia and regionally," Rahman said.
The government, last week, announced a total lockdown to curb the spread of the pandemic would start on June 1.