CIMB’s third quarter net profit down 16%

PETALING JAYA: CIMB Group Holdings Bhd reported a drop of 16.15% in net profit to RM890.27 million for the third quarter ended Sept 30 compared with RM1.06 billion in the previous corresponding period, largely due to higher loan impairments at PT Bank CIMB Niaga.
Its third-quarter revenue rose 1.25% from RM3.49 billion to RM3.53 billion.
In a filing with Bursa Malaysia, CIMB said its total gross loans expanded 9.8% or 11.1% after adjusting for foreign exchange fluctuations.
The group’s gross impairment ratio improved to 3.3% as at September 2014 from 3.4% in Sept 2013.
CIMB’s cost to income ratio was marginally lower at 57.8% compared with 58.1%previously. Its net interest margins were unchanged at 2.86%.
Over asset quality, its total capital ratio stood at 15% while common equity tier 1 capital ratio stood at 9.7%.
CIMB acting CEO Tengku Datuk Zafrul said 2014 has been a challenging year for the group, especially its nine-month profitability was largely impacted by the difficult operating conditions in Indonesia coupled with the weakened Rupiah, which brought about a 36.4% decline in CIMB Niaga’s profit before tax contributions.
"Regional capital markets volumes and volatility remained weak resulting in the softer performances at both investment banking and treasury and markets. Nonetheless, the Malaysian consumer bank is performing well, while CIMB Bank Singapore and CIMB Thai continues to grow strongly," he noted.
Zafrul believes the group could maintain steady growth, while CIMB Singapore is expected to maintain a positive momentum.
“Thailand is showing encouraging signs of economic recovery and improving consumer confidence. The gradually improving capital markets augur well for the group’s treasury and markets,” he said.
However, he said CIMB Niaga is expected to continue to be challenged by asset quality and tight liquidity in the Indonesian banking system in the near term.
On the proposed three-way merger, Zafrul said all three parties are presently in deep discussions and are in the midst of a due diligence process.
“We expect to come to an agreement by early Q1 15,” he added.
For nine-month period, CIMB saw its net profit drop 17.01% from RM3.50 billion to RM2.91 billion, while revenue went down 3.69% to RM10.47 billion from RM10.87 billion.