CIMB Group Holdings Berhad (“CIMB Group” or the “Group”) reported a net profit of RM4.47 billion for the first 9 months of 2018 (“9M18”) bolstered by a gain from the sale of 20% of CIMB-Principal Asset Management (“CPAM”) and 10% of CIMB-Principal Islamic Asset Management (“CPIAM”) amounting to RM928 million. This raised the Group’s 9M18 Return On average Equity (“ROE”) to 11.6%, and reduced its Cost-to-Income Ratio (“CIR”) to 48.0%.
On a Business-As-Usual (“BAU”) basis, Profit Before Tax (“PBT”) was RM4.76 billion for 9M18 representing a 4.0% year-on-year (“Y-o-Y”) growth. Lower Y-o-Y operating expenses of 6.4% and loan loss provisions of 30.7% contributed to the Group’s increase in 9M18 BAU net profit by 3.6% Y-o-Y to RM3.54 billion.
This was achieved despite a 5.6% Y-o-Y drop in operating income due to weaker capital markets in Malaysia. The 9M18 net earnings per share (“EPS”) stood at 38.0 sen, while the annualised ROE was 9.8%.
“We are pleased to deliver a record PBT of RM5.69 billion in 9M18 despite the challenging operating landscape. The good 9M18 performance was underpinned by lower provisions and costs, continued improvement from Consumer and Commercial banking, as well as a recovery in Wholesale banking revenue in 3Q18,” said Tengku Datuk Seri Zafrul Aziz, Group Chief Executive, CIMB Group.
CIMB Group’s 9M18 operating income was 5.6% lower Y-o-Y at RM12.38 billion from a 10.0% decline in non-interest income from slower capital markets in Malaysia in 2Q18 and a 3.7% decline in net interest income mainly from Commercial and Wholesale banking.
This was offset by a RM163 million gain from the sale of 50% of CSI from 1H18. The Group’s PBT was 4.0% higher Y-o-Y at RM4.76 billion, with operating expenses and loans provisions declining by 6.4% and 30.7% YoY, respectively. The 9M18 CIR stood at 51.6%.
The Group’s Consumer Bank PBT was 23.1% higher Y-o-Y in 9M18 at RM2.36 billion, making up 49% of Group PBT. The better performance was attributed to 53.2% lower provisions with revenue growth underpinned by steady net interest income and non-interest income growth.
The Commercial Banking PBT increased by 69.4% Y-o-Y from its regional business recalibration, although the lower cost and provisions were partially offset by a decline in operating income.
PBT at the Group’s Wholesale Banking division was RM1.27 billion or 31.3% lower Y-o-Y from the significantly weaker capital markets in 2Q18 and higher provisions. Group Asset Management and Investments (“GAMI”) PBT improved 52.6% Y-o-Y from better performances in both public and private markets, with a 14.4% increase in public markets assets under management. Group Funding PBT increased 17.2% Y-o-Y mainly from the RM163 million gain arising from the sale of 50% of CSI.
Non-Malaysia PBT contribution to the Group stood at 35% in 9M18 compared to 33% in 9M17. Indonesia’s PBT decreased by 5.3% Y-o-Y to RM915 million.
However, excluding FX translation effects, Indonesia’s PBT expanded 8.7% Y-o-Y in line with CIMB Niaga’s improving performance. Thailand's PBT contribution of RM356 million was a 83.5% Y-o-Y increase mainly from improvements in Consumer and lower provisions. Total PBT contribution from Singapore was 14.2% higher Y-o-Y at RM330 million mainly from savings on the deconsolidation of CSI.
“As 2018 draws to a close, we remain on track to meet our key T18 targets. However, we remain cautious amidst 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 mid-term plan to propel CIMB onto a stronger growth trajectory,” said Tengku Zafrul.
