CIMB Group CEO Datuk Abdul Rahman Ahmad
KUALA LUMPUR: CIMB Group
Holdings Bhd adopts a cautious view as it approaches the second half of 2023 given the economic uncertainty due to elevated inflation and interest rates, according to group chief executive officer Datuk Abdul Rahman Ahmad.
“We expect the challenging market environment caused by heightened deposit competition to moderate within our key operating markets, and we are committed to making further investments to continue reshaping our portfolio, aligned to our focus areas under the Forward23+ strategic plan,” he said in a statement.
“We look to further accelerate growth in key markets and segments such as Indonesia and SME, whilst sustaining our risk and asset quality management as well as improving our technology and operational resilience to bolster the group’s positive return on average equity (ROE) momentum, Abdul Rahman said.
He added that the group’s strong capital position equipped the group with sufficient safeguards for any market uncertainties and allows the bank to continue its investment in key identified areas that would support its growth.
CIMB is also committed to implementing the necessary security initiatives as mandated by Bank Negara Malaysia to safeguard against financial scams with the recent mandatory customer call verification process for all first-time app logins and SecureTAC authorisation for all financial and key non-financial transactions, with additional measures to be introduced progressively throughout the year.
“This is part of our efforts to increase and enhance the resiliency of our digital platforms through further investments, whilst improving greater uptime performance and building up platform reliability,” Abdul Rahman said.
In the first quarter ended March 31 (1Q23), CIMB posted a 15.3% jump in net profit to RM1.64bi from RM1.43bil a year ago.
The higher profit was driven by sustained operating income growth, strong cost controls, and a contained level of provisions.
The performance translates to a strong improvement in annualised ROE of 10.3%, as compared to 9.6% recorded in 1Q22, and earnings per share (EPS) of 15.4 sen.
Revenue for the period rose 5.5% to RM5bil against RM4.73bil a year earlier billion, driven by non-interest income (NOII) which grew 24.3% year-on-year (YoY) to RM1.48bil, contributed by improved investment, foreign exchange, and other income.
However, CIMB said net interest income (NII) dipped marginally by 0.8% YoY to RM3.52bil, due to net interest margin (NIM) compression caused by heightened deposit competition but was partially offset by strong loan growth momentum.
CIMB’s total gross loans increased 7.4% YoY across key markets and segments, especially in Indonesia which grew 10.1% YoY.
Deposits also increased by 6.1% YoY, while total current account and savings account (CASA) declined due to greater consumer spending on the back of post-pandemic growth in economic activity, as well as the migration to higher yield term deposits which led to a lower CASA ratio of 37.9%.
The group’s cost-to-income ratio (CIR) improved YoY to 46.9%, as 1Q23 operating expenses rose 2.9% YoY due to the absence of one-off non-recurring expenses recorded in the prior year.
Total provisions were contained, rising only 5.0% to RM445mil despite the absence of recoveries in 1Q22.
The group’s capital position remains strong and above target with its common equity tier 1 (CET1) ratio at 14.3% as at Mar-23.
CIMB’s total gross loans increased by 7.4% YoY to RM413.2bil and total deposits by 6.1% YoY to RM467.9bil.
It registered a loan-to-deposit (LDR) ratio of 88.3% as at Mar-23, an improvement of 1.1% YoY.
“Our positive 1Q23 performance was contributed by robust NOII expansion, strong loan growth momentum across all segments of our business and sustained asset quality and cost discipline.
“Further, we are pleased with the strong performance and contribution growth from Indonesia, reflecting the positive trajectory and impact of our focused Asean strategy,” Abdul Rahman said.
“Focused execution of initiatives under our Forward23+ strategic plan, particularly on accelerating efforts to expand our CASA and deposits franchise across our target segments remains our key priority as we continue to monitor the heightened deposit competition across all markets.
“We will maintain a close watch of the current turbulent economic environment posed by the elevated interest rates and inflation by continuing to strengthen our business and operational resiliency, whilst supporting our customers through volatile market conditions,” he added.
