CIMB Q4 net profit up fourfold to RM825.7m

KUALA LUMPUR: CIMB Group Holdings Bhd, which registered a fourfold jump in earnings for the fourth quarter of 2015, expects slower loan growth of 10% for 2016 even as it sees an improvement in provisions for the Indonesian market.
"We will continue to see challenges in countries we operate, we expect the performance to improve this year, we don't expect the number to contract, it's a slower (loan) growth and it will not be negative," group CEO Tengku Datuk Seri Zafrul Tengku Abdul Aziz told a media briefing here yesterday on the release of the financial results.
Last year, CIMB's total gross loans grew 12.8% or 6.6% excluding foreign exchange fluctuations. Its gross impairment ratio improved to 3.0% from 3.1% a year ago.
On provisions, he expects it to improve this year but without committing how long more it will continue.
"It is difficult to give forecast (on how long the provisions will be), but we're optimistic that second half will be better," he said.
CIMB saw a 312.21% surge in net profit to RM825.74 million for the fourth quarter ended Dec 31, 2015 compared with RM200.32 million in the previous corresponding period, thanks to higher operating income and lower provisions.
Revenue for the quarter under review expanded 10.06% from RM3.67 billion to RM4.04 billion.
It has proposed to declare a second interim net dividend of 11 sen per share, bringing total dividends amounted to 14 sen for 2015, representing a dividend payout ratio of 41.9%.
Full-year net earnings, however, fell 8.28% from RM3.11 billion to RM2.85 billion, due to provisions remained elevated from Indonesia and Thailand. Revenue came in at RM15.4 billion, a 8.84% growth from RM14.15 billion.
Given higher cost of deposits in Malaysia, the group's net interest margins (NIM) dropped to 2.66% from 2.8% a year ago.
Zafrul foresees a continued NIM compression of five to 10 basis points this year.
He highlighted that the group has not seen any deterioration in asset quality despite a slower economy.
"We haven't seen, but we're mindful of it as the economy is expected to moderate. We haven't seen deterioration in our books for Malaysia.
"Having said that, we've to be cautious as we're projecting slightly higher credit charges and delinquency," Zafrul explained.
He said the group's cost and capital management efforts continued to pay off, with a 350-basis points decline in cost-to-income ratio to 55.6%.
Zafrul said the group's focus will be still on "completing" its footprint within the Asean region while pursuing more organic expansions in Vietnam and the Philippines instead of merger and acquisition options.
"This year, we expect to start out operations in Vietnam...Philippines is still on radar screen, but we'll do it at the right time," he said.
Zafrul does not discount the possibility of securing a banking licence in the Philippines following the liberalisation of the foreign ownership of up to 100% stake in local banks.