CIMB’s 4Q21 profit rises on lower provisioning

The bank registered higher EPS of 8.4 sen for the period against 2.2 sen previously 

by S BIRRUNTHA 

CIMB Group Holdings Bhd saw its net profit for the fourth quarter ended Dec 31, 2021 (4Q21), jump close to four times to RM854.51 million from RM214.98 million a year ago, underpinned by significantly lower provisions. 

Revenue for the quarter fell 1.68% to RM4.59 billion from RM4.67 billion a year ago, according to the group’s filing to Bursa Malaysia yesterday. 

The bank registered higher earnings per share (EPS) of 8.37 sen for the period against 2.17 sen previously. 

For the full-year ended Dec 31, 2021 (FY21), CIMB’s net profit surged to RM4.3 billion from RM1.19 billion a year earlier, while its revenue climbed 14.87% to RM19.51 billion from RM16.99 billion. 

The group also proposed a second interim dividend of 12.55 sen per share, bringing the total proposed annual dividend for FY21 to 22.99 sen per share for a payout ratio of 50% of core net profit, in line with the group’s dividend policy. 

Commenting on the financial results, CEO Datuk Abdul Rahman Ahmad (picture) said the bank is pleased to have ended the year on a strong note, with its group’s performance remaining resilient in FY21 despite the ongoing impact and uncertain recovery surrounding the Covid-19 pandemic. 

“We have seen strong underlying operational performance recovery across all our business segments and geographies, driven by solid growth in operating income, discipline in containing cost escalation and lower provisions as per our target. 

“We also made considerable progress on our Forward23+ strategic plan where we were able to meet or exceed all our FY21 profitability targets across return on average equity (ROE), cost-income ratio (CIR) and credit cost/provisions,” he said in a virtual media briefing yesterday. 

Abdul Rahman also said while loan growth came in slightly below target as CIMB reshaped its portfolio towards the group’s focused investment areas and protected asset quality to improve risk-adjusted returns, it saw positive asset growth momentum in 4Q21. 

He added that this momentum, along with the more positive economic outlook in 2022, provides confidence in its continued growth trajectory. 

Abdul Rahman said the group took the expected credit loss (ECL) which occurred in 4Q21 proactively. 

He noted that as communicated in January 2022, the group discovered a processing error that was related to a specific third-party financial remittance service, which led to a limited number of customers receiving duplicate credits to their accounts. 

“The group is pursuing the necessary measures to recover the duplicate payments from the affected customers. 

“In view of the ongoing assessment and recovery measures, the group has prudently provided for the majority of the exposure with an ECL of RM280.9 million in FY21,” he said. 

He also added that depending on the group’s recovery engagement and outcome with customers, an additional and lower final provision amount may be taken in 1Q22. 

Notwithstanding the provisions, he said CIMB had met its FY21 targets across all profitability metrics, including ROE, CIR and credit cost/provisions. 

Moving forward, Abdul Rahman said while the outlook for the group remains mixed and uncertain due to pandemic related developments such as the Omicron variant, the group believes the economies we operate in will show further recovery in 2022 due to the significant progress of vaccination programmes and the opening up of economic activities. 

He said the group is also hopeful of the progressive migration of customers out of repayment assistance over the year. 

At the same time, he noted the group will continue to assist those still impacted customers through programmes such as the Financial Management and Resilience Programme together with Agensi Kaunseling dan Pengurusan Kredit as it remains committed to helping all impacted customers navigate out of this pandemic. 

Abdul Rahman also said the group’s priority remains on executing its Forward23+ strategic plan to build on its positive growth momentum, supported by a focused approach in making the necessary investments into its areas of growth such as affluent and wealth management, transaction banking and Asean network business. 

A key focus investment area, according to him, is technology and operations, where the group plans to invest close to RM1.2 billion in FY22 as it commits to accelerating its digital transformation and further strengthening its technology and operational resilience. 

Shares of CIMB closed four sen or 0.71% higher at RM5.71 yesterday, valuing the group at RM57.96 billion.