CIMB Group records RM100.59m net loss

by ASILA JALIL / pic by TMR FILE 

CIMB Group Holdings Bhd recorded a net loss of RM100.59 million in its third-quarter ended Sept 30, 2021 (3Q21), dragged down by a flat core operating income. 

The banking group posted a net profit of RM194.44 million in 3Q20. 

CIMB registered core operating income of RM4.39 billion in 3Q21 compared to RM4.41 billion in 3Q20. 

The banking group also recognised exceptional expenses amounting to RM1.31 billion in the period, consisting primarily of a non-cash accounting impairment of goodwill related to the group’s Thailand business of RM1.22 billion and RM83 million in intangible assets write-off and accelerated amortisation. 

“This exceptional expense is non-recurring and has no impact to CIMB’s liquidity and capital position, and is expected to help optimise the group’s return on equity (ROE) going forward,” the bank noted in a release yesterday. 

There were also modification losses incurred on the repayment assistance programme under the Pemulih assistance package. 

Group revenue for the quarter slipped by 0.4% year-on-year (YoY) to RM4.39 billion. 

For the cumulative nine months period (9M21), net profit surged 251.3% YoY to RM3.44 billion driven by higher operating income, strong cost containment and significantly lower provisions, as well as improvements seen across all segments and markets. 

This translates to an annualised core return on average equity of 9% for 9M21 with an earnings per share of 34.5 sen. 

Revenue for the nine months rose 21.1% YoY to RM14.93 billion while core operating income expanded by 11.7% YoY to RM13.77 billion. 

Its net interest income (NII) grew by 12.9% YoY to RM10.42 billion, largely driven by improved net interest margins (NIM) in Malaysia and Indonesia. 

The group achieved its highest ever common equity tier 1 ratio of 13.9% as at September 2021 from 13.3% as at December 2020. 

“We saw slower quarter-on-quarter (QoQ) momentum due to modification loss as we expanded our repayment assistance to help affected borrowers under the Pemulih programme, and lower non-interest income (NOII) due to the weaker trading environment and restricted economic activity. 

“However, our 9M21 performance indicates continued strong YoY recovery across all segments and markets as we make good progress towards achieving our FY21 targets,” group’s CEO Datuk Abdul Rahman Ahmad stated. 

Gross loans grew by 1.6% YoY in 9M21 driven by 2.5% growth in Malaysia and 3.1% growth in Singapore, which partially offset contractions in Thailand and Indonesia. Total deposits were up by 5.5% YoY while current account saving account (CASA) rose 9.6% YoY, with the CASA ratio reaching 41.5% as at September 2021.

The group’s loan-to-deposit ratio stood at 84.5% as at September 2021, down by 3.3% from 87.8% in the preceding quarter. 

Commercial banking’s operating income grew by 6.5% YoY while pre-tax profit for the segment increased significantly due to strong pre-provisioning operating profit and lower expected credit losses, with NII and NOII registered growth of 6.6% and 6%, respectively. 

Deposits grew by 10.3%, underpinned by CASA growth of 13.3%. 

CIMB Islamic Bank Bhd’s operating income for 9M21 grew 27.5% YoY while pre-tax profit improved, driven by a robust topline along with lower provisions. 

Net financing income grew by 33.7% on the back of improved NIM driven by lower funding costs, whilst non-financing income was marginally lower YoY despite improved QoQ performance from fee income. 

Islamic financing grew 4.5% YoY, whilst deposits grew by 10.3%. 

Abdul Rahman said the group continues to make strategic investments particularly in strengthening its digital capabilities to meet the needs of banking customers. 

“An upcoming highlight is the planned rollout of our Next Gen mobile banking app in the first half of FY22,” he added.