CIMB’s 3Q18 net profit rises 4.4% due to lower cost

by NG MIN SHEN / TMR file pix

CIMB Group Holdings Bhd’s net pro t rose 4.4% to RM1.18 billion for the third quarter ended Sept 30, 2018 (3Q18), compared to RM1.13 billion recorded a year ago, helped by lower operating cost and provision by overseas subsidiaries.

Revenue for the quarter dropped 6.3% to RM4.14 billion from RM4.42 billion registered last year.

The second-largest banking group based on assets said operating income fell 6.4% to RM4.14 billion, a 17% drop for non-interest income and 1.6% decline for net-interest income (NII).

Wholesale banking profit before tax fared worse, dropping 41.7% year-on-year (YoY) across all wholesale segments due to the weaker capital markets.

But the bank said profit before tax from consumer banking improved on better cost management, regional consumer banking rose on reduction in provisions, group asset management and investments increased on improvement in private markets.

For the January-September 2018 period, the banking group’s net profit jumped 31.1% to RM4.47 billion from RM3.41 billion previously, while revenue improved 1.5% to RM13.31 billion compared to RM13.11 billion posted the year before.

The higher nine-month (9M18) earnings were largely due to the RM928 million gain from the sale of partial stakes in CIMB-Principal Asset Management Bhd and CIMB-Principal Islamic Asset Management Sdn Bhd.

Excluding the gain on the asset management stake sales, the group’s 9M18 operating income fell 5.6% YoY to RM12.38 billion as non-interest income fell 10% from slower domestic capital markets during 2Q18, while NII declined 3.7% mainly from commercial and wholesale banking.

Total gross loans (excluding the bad bank) climbed 4.9% YoY to RM338.4 billion as at September 2018, led mainly by consumer banking and wholesale banking with growth of 5.4% and 5.1% respectively.

The bank’s Malaysian operations recorded a loan growth of 11% YoY, Thailand (5.5%), Singapore (3.9%), Indonesia (2.2%) and Labuan, London (UK), Cambodia, Vietnam, Hong Kong and Shanghai in China (0.1%).

Total deposits rose 3.7% YoY to RM367 billion as at September this year.

Gross impaired loans ratio stood at 3.1% as at end-September this year versus 3.5% previously, while cost-to-income ratio was at 51.6%

against 52.1% previously. Net-interest margin was lower at 2.52%, attributed to the contraction at PT Bank CIMB Niaga Tbk.

CIMB group CEO Tengku Datuk Seri Zafrul Aziz said the banking group remains on track to meet its key T18 targets, although it remains cautious amid weaker regional economies and global trade tensions.

“Against this backdrop, we will continue to control asset quality and cost across all businesses and geographies, while we finalise our next midterm plan to propel CIMB onto a stronger growth trajectory,” he said.