CIMB optimistic of exceeding T18 targets

KUALA LUMPUR: CIMB Group Holdings Bhd is cautiously optimistic about 2018 and is poised to exceed its targets set for its Target 2018 (T18) initiative this year, the final year of the four-year programme.

CIMB chairman Datuk Seri Nazir Razak is hopeful that the bank will be able to exceed the T18 targets at the end of the year.

Among the targets that CIMB has set for itself under T18 is to exceed a return on equity (RoE) of 10.5%-11% (9.6% in 2017), cost-to-income ratio of 50% (51.8% in 2017), common equity tier 1 ratio of 12% (12.2% in 2017), income contribution from consumer and commercial banking of 60% (57.2% in 2017) and a presence in 10 Asean countries (nine in 2017).

“We will come out with a medium-term plan for CIMB beyond 2018, and that will look into the challenges of the fourth industrial revolution and CIMB’s strategies to mitigate that and to leverage on the various opportunities that come with technological advancements,” Nazir told a press conference after its AGM today.

He explained that technology is challenging as it has devastating effects on many incumbent businesses, and that technology, fintech and non-banks are coming into the banking space.

“Technological change is so rapid that banks have to relook their business and think about leveraging on technology and improving all processes, collaborating with other companies to be more competitive, and think about the advent of global payment players and how you adjust your business to compete with that,” said Nazir.

CIMB group CEO Tengku Datuk Seri Zafrul Aziz said it is on track to achieve its loan growth target of 6% this year, from 0.2% last year, mainly driven by all its businesses, including the consumer, wholesale and corporate segments.

“We look at the pipeline and we feel that we’re able to meet the target. The first four months have been on track. We see challenges though in other countries. For Malaysia, we should grow about 6% (loan growth), while Thailand and Indonesia are expected to grow 5% this year.”

“Costs go up every year but we need to make investments. We have to make sure income goes up faster,” said Zafrul, emphasising that there will be no rationalisation.

He added that deposit is expected to grow in tandem with loan growth and expects net interest margin to continue to be stable, hence it is not expecting stiff competition in deposits.

Meanwhile, CIMB does not expect the waiver of its online fund transfer fees to affect its non-interest income significantly, but only a “very small” impact.

“It’s an amount that we can live with. What’s important is the benefit to customers over the long-term and how it will support a cashless society,” Zafrul said.

CIMB Bank Bhd had on Wednesday announced that it is waiving the Interbank GIRO fee of 11 sen per transaction and Instant Interbank Fund Transfer fee of 53 sen per transaction performed on its online banking platform, CIMB Clicks (www.cimbclicks.com.my), as well as CIMB Clicks and CIMB EVA mobile apps, regardless of transaction amount.