CIMB continues to value its partnership with CGS

“We value our current partnership with CGS where we continue to own a residual 25% stake," said Abdul Rahman.

PETALING JAYA: The “marriage” between CIMB Group Holdings Bhd and China Galaxy Securities Co Ltd (CGS) for the stockbroking business may not be ending after all.

This was hinted by CIMB chief executive officer Datuk Abdul Rahman Ahmad as he labelled a news report by a local business publication on the acquisition of KAF Investment Bank Bhd’s stockbroking business by CIMB as “market rumour.”

“We do not comment on any market rumour or speculation.

“We value our current partnership with CGS where we continue to own a residual 25% stake and we are very happy with what we have achieved together in growing the segment regionally,” he told reporters during a virtual results briefing.

Quoting sources, the business publication reported that CIMB is close to acquiring KAF’s stockbroking operations and that CGS is expected to exercise a call option to take full control of CGS-CIMB Securities.

CGS-CIMB Securities is the stockbroking operations of CIMB and CGS, one of China’s largest stockbrokers.

CIMB, which is Malaysia’s second-largest banking group by assets, unveiled its financial results for financial year 2022 (FY22) yesterday.

Its net profit for FY22 increased by 26.65% year-on-year (y-o-y) to RM5.44bil, although revenue rose at a much slower pace of 1.66% y-o-y to RM19.84bil.

Abdul Rahman said the strong performance was driven by stronger operating income from robust loan growth and net interest margin (NIM) expansion, stringent cost management as well as lower provisions from prudent risk management, recoveries and portfolio de-risking.

In FY22, CIMB’s NIM expanded by six basis points to 2.51%, driven by the interest rate hikes in Malaysia and Singapore.

The banking group’s total loans grew by 7.7% y-o-y to to RM407.1bil in FY22 on the back of sustained growth momentum across all key markets and business segments, although the growth was lower than the guidance for FY22 at 8% to 9%.

Meanwhile, CIMB’s total deposits expanded by 4.6% to RM460.6bil in FY22.

Commenting on the outlook, however, CIMB expects a moderate loan growth and an intensifying competition for deposits in FY23.

“I think all banks recognise that the competition for deposits intensifies. So, as part of our core focus for 2023, we will continue to strengthen and expand our current account and savings account (CASA) and deposit franchise,” said Abdul Rahman.

In FY22, CIMB’s total CASA contracted slightly by 1.8% y-o-y, with a CASA ratio of 39.9% as at December 2022.

CIMB’s annualised loan loss charge in FY22 improved to 51 basis points (bps), significantly lower than the 73 bps registered in FY21, due to a drop in total provisions.

The group’s loan loss allowance coverage stood at 93.1%, with a gross impaired loans ratio of 3.3%.

In the fourth quarter of FY22, CIMB’s net profit rose by 55.05% y-o-y to RM1.32bil. Revenue increased by 13.8% y-o-y to RM5.22bil in the quarter.

Earnings per share rose to 12.49 sen. A dividend of 13 sen was declared for the quarter.

Going into 2023, Abdul Rahman said CIMB’s focus segments would be its affluent and wealth management business, with particular focus on growing the deposits and CASA franchise, transaction banking and regional Asean network business.