CEO Abdul Rahman said the banking group is committed to making further investments to continue reshaping its portfolio, aligned to its focus areas under the Forward23 strategic plan.
PETALING JAYA: The global economic uncertainty is leading CIMB Group
Holdings Bhd to take a “cautious view” going into the second half of 2023 (2H23), while remaining focused on executing its initiatives under the Forward23+ strategic plan.
Group chief executive officer Datuk Abdul Rahman Ahmad said the banking group is committed to making further investments to continue reshaping its portfolio, aligned to its focus areas under the strategic plan.
“Focused execution of initiatives under our Forward23+ strategic plan, particularly on accelerating efforts to expand our current account, savings account (CASA) and deposits franchise across our target segments, remains our key priority as we continue to monitor the heightened deposit competition across all markets,” he said in a statement yesterday.
Abdul Rahman, however, expects the challenging market environment, caused by heightened deposit competition, to moderate within the bank’s key operating 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 while supporting our customers through volatile market conditions,” he said.
CIMB is looking to further accelerate growth in key markets and segments such as Indonesia and small and medium enterprises, while sustaining its risk and asset quality management as well as improving its technology and operational resilience.
This, according to Abdul Rahman, is to bolster the group’s positive return-on-equity (ROE) momentum.
“Our strong capital position equips us with sufficient safeguards for any market uncertainties and allows us to continue our investment in key identified areas that will support the group’s growth,” he added.
On efforts to combat scams, Abdul Rahman said the group is actively working on introducing additional measures progressively throughout the year to enhance safeguards against financial scams.
“This is part of our efforts to increase and enhance the resiliency of our digital platforms through further investments, while improving greater uptime performance and building up platform reliability,” he noted.
For the first quarter ended March 31, 2023 (1Q23), CIMB reported a net profit of RM1.64bil, a 15.3% year-on-year (y-o-y) growth, driven by sustained operating income growth, strong cost controls and contained level of provisions.
The performance translates to an improvement in annualised ROE of 10.3%, as compared to 9.6% recorded in 1Q22, and earnings per share of 15.4 sen in the quarter compared to 13.96 sen in 1Q22.
Revenue for the period stood close to RM5bil, an increase of 5.5% y-o-y, driven by non-interest income (NOII) which grew 24.3% y-o-y to RM1.48bil on improved investment, foreign exchange and other income.
“However, net interest income dipped marginally by 0.8% y-o-y to RM3.52bil, due to net interest margin compression caused by heightened deposit competition but was partially offset by strong loan growth momentum,” the bank said.
CIMB’s total gross loans increased 7.4% y-o-y to RM413.2bil across key markets and segments, especially in Indonesia which grew 10.1% y-o-y.
Deposits also increased by 6.1% y-o-y to RM467.9bil, while total CASA declined by 7.6% y-o-y due to greater consumer spending on the back of post pandemic growth in economic activity, as well as the migration to higher yield term deposit which led to a lower CASA ratio of 37.9%.
Commenting on the results, Abdul Rahman said the bank’s positive performance was contributed by robust NOII expansion, strong loan growth momentum across all segments of its 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,” he added.
Additionally, as 1Q23 operating expenses rose by 2.9% y-o-y due to absence of one-off non-recurring expenses recorded in prior year, the bank’s cost-to-income ratio improved to 46.9%.
Total provisions were contained, rising only 5% to RM445mil despite the absence of recoveries in 1Q22.
On a quarter-on-quarter (q-o-q) basis, operating income contracted 4.3% due to elevated cost of deposits but was partially offset by growth in NOII.
“However, cost improved 5.8% and provisions were lower by 40.2% due to the absence of accelerated accruals and additional provisions overlays made in 4Q22,” the bank noted.
Accordingly, net profit improved by 24.2% from RM1.32bil in 4Q22.
The group’s capital position also remains strong and above target with its common equity tier-1 ratio at 14.3% as at March 2023.
On asset quality, the banking group said total provisions increased by 5% to RM445mil due absence of recoveries from Singapore but decreased by 40.2% q-o-q from lower overlays.
“The group’s allowance coverage stood at 94.2%, while the gross impaired loan ratio was steady at 3.2%, with an annualised 1Q23 loan loss charge of 37 basis points,” it said.
