CIMB posts lower earnings in Q1

PETALING JAYA: CIMB Group Holdings Bhd’s net profit fell 8.7% to RM1.19 billion for the first quarter ended March 31, 2019 (Q1 19) against RM1.31 billion in the previous corresponding period, due to lower operating income and higher operating expenses, partially offset by a 25.2% decline in loan loss provisions.

Revenue for the quarter under review also declined 3.2% to RM4.17 billion from RM4.3 billion.

CIMB told Bursa Malaysia that its operating income was 3.2% lower due to a decline in fee income and the RM152 million gain from the sale of CIMB Securities International in the prior year’s corresponding period.

Operating expenses rose 7.5% from incremental investments and Forward23-related expenses, resulting in the group’s cost-to-income ratio registering at 55.3% in Q1 19 compared with 49.8% in Q1 18.

The group’s total gross loans grew 7.6% while total deposits were 5.6% higher. The loan-to-deposit ratio stood at 91.4%, compared with 89.7% as at end-March 2018.

Its gross impairment ratio stood at 3.0% as at end-March 2019, with an allowance coverage of 103.5%. Net interest margin was lower at 2.48% due to spread compression in Malaysia and Thailand.

CIMB said non-Malaysia profit before tax (PBT) contribution to the group rose to 45% in Q1 19 compared with 28% in Q1 18 from stronger performances in Indonesia and Thailand.

Meanwhile, CIMB Islamic’s PBT increased 19.8% to RM248 million in Q1 19 driven by 16.4% operating income growth and 57.6% lower provisions.

As at March 31, 2019, the group’s total capital ratio stood at 16.2% while the common equity tier 1 capital ratio stood at 12.8%.

Looking ahead, CIMB group CEO Tengku Datuk Seri Zafrul Aziz expects the rest of 2019 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,” he said.

At the midday break, CIMB’s share price was down 2 sen or 0.4% to RM5.16 on 2.16 million shares done.

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