CIMB’s Q1 profit tumbles 45.6% on restructuring expenses

PETALING JAYA: CIMB Group Holdings Bhd's net profit for the first quarter ended March 31, 2015 slumped 45.59% to RM580.12 million from RM1.07 billion in the previous corresponding period, mainly due to exceptional restructuring expenses of RM202 million.
Excluding that, CIMB's earnings would have dropped 26.6% on the back of higher corporate loan provisions from its Indonesian operations.
Revenue for the quarter under review, meanwhile, rose 4.02% from RM3.54 billion to RM3.68 billion.
In a filing with the stock exchange, CIMB said its operating income grew 4.0% to RM3.68 billion, underpinned by a 4.7% expansion in net interest income and a 2.5% growth in non-interest income.
Its net interest margins, however, were lower at 2.65%, compared with 2.87% in the previous corresponding period.
CIMB's profit before tax contribution from non-Malaysian market was lower at 20% versus 38% in the same period last year, primarily due to the 89.4% decline in Indonesia's profit before tax to RM45 million from lower CIMB Niaga earnings.
The group's total gross loans expanded 12.8%, with a slightly higher gross impairment ratio of 3.2% as at March 2015 from 3.1% in March 2014.
As at March 31, CIMB's total capital ratio stood at 14.3% while the common equity tier 1 (CET1) capital ratio stood at 10.0%, which was higher than last year's CET1 ratio of 9.6% following the release of regulatory reserves by Bank Negara in the fourth quarter last year as well as the continued dividend reinvestment scheme.
CIMB CEO Tengku Zafrul Tengku Abdul Aziz remains cautious on the group's outlook given the regional economic environment and the moderation in consumer spending in Malaysia.
"CIMB Singapore continues to perform positively with continued business growth. CIMB Thai will likely show operational improvements despite the uncertain macroeconomic environment. And as expected, CIMB Niaga remains challenged by near term asset quality concerns in light of ongoing economic uncertainties," he said.
"As predicted, 2015 looks challenging and is CIMB's year of recalibration. We will continue to focus on cost management and operational streamlining, at the same time continue to ensure core operations remain robust. It's early days yet, but the changes and decisions we have taken in line with T18 (Target 18) are starting to show some results, and we will continue to be single minded and focused on the execution of our plans," he added.