CIMB’s Q3 net profit down 9.7% on restructuring costs

PETALING JAYA: CIMB Group Holdings Bhd’s net profit for the third quarter ended Sept 30, 2015 fell 9.7% to RM803.89 million from RM890.27 million a year ago due to restructuring costs.
Excluding the restructuring costs, its third quarter business-as-usual (BAU) net profit was 1.3% higher year-on-year, due to improved operating income and lower provisions.
Revenue rose 8.8% to RM3.84 billion in the third quarter this year compared with RM3.53 billion in the previous year on the back of an increase in net interest income and non-interest income.
In the three months, operating income grew 0.2% to RM3.840 billion as a result of a 6.4% expansion in net interest income (NIM) and a 13% decrease in non-interest income, mainly from weaker treasury and markets performance.
For the nine months period, it reported a 30.4% fall in net profit to RM2.02 billion, from RM2.91 billion a year ago on the back of the higher corporate loan provisions in Indonesia. Revenue, however, increased 8.4% to RM11.35 billion from RM10.47 billion in the previous year, underpinned by improvements in non-interest income and net interest income.
The group’s NIM was lower at 2.65% driven mainly by the higher cost of consumer deposits in Malaysia.
CIMB group chief executive Tengku Datuk Seri Zafrul Tengku Abdul Aziz said its continued improvement in quarter-on-quarter performance, amid the economic uncertainties and challenges, reaffirms its business recalibration and the group’s commitment towards managing cost.
“In addition to the structural cost alignment initiatives of streamlining the ex-Asean IB (investment bank) operations and the MSS (mutual separation scheme) in Malaysia and Indonesia, we have also improved processes and increased automation to enhance efficiency. We will continue to push the cost management agenda further,” he said in a statement.
In terms of business segments, Tengku Zafrul said the group’s business strategies are bearing results, with the consumer and commercial banking operations gaining good traction across the region. “2015 is proving to be a challenging year for the financial services industry. Our Malaysia operations showed encouraging performance in difficult conditions, but we continue to be cognisant of moderating economic growth and a slowdown in consumer spending.”
In Singapore, despite industry tightening measures, CIMB continues to sustain positive growth momentum on the back of its cost-efficient business platform.
CIMB Niaga in Indonesia continues its growth momentum, and its key focus will be on asset quality.
While the outlook for its Thai operations is challenging in the prevailing economic environment, CIMB remains committed in view of the long-term strategic prospects.
“We embarked on our three-year T18 recalibration initiatives earlier this year and as a result, the group is well positioned to face the prevailing headwinds from a structural alignment and cost management perspective.
“While our growth strategy continues to be measured considering the environment of weaker regional economies and capital markets, we remain confident that our T18 strategy will continue to deliver the results we set out to achieve,” said Tengku Zafrul.