Lower operating expenses, loan loss provisions push CIMB's Q1 earnings up 10.6%

PETALING JAYA: CIMB Group Holdings Bhd's net profit soared 10.6% to RM1.31 billion for the first quarter ended March 31, 2018 against RM1.18 billion in the previous corresponding period, driven by lower operating expenses of 6.8% and a 5.4% decline in loan loss provisions.

However, revenue for the quarter under review fell marginally by 1.3% to RM4.3 billion from RM4.36 billion.

CIMB told Bursa Malaysia that its operating income declined 1.3% due to lower net interest income and the deconsolidation of CIMB Securities International (CSI), which was partially offset by a RM152 million gain arising from the CSI sale.

Its total gross loans (excluding the bad bank) grew by 0.5% to RM323.1 billion, while gross impairment ratio stood at 3.2% as at end-March 2018 with an allowance coverage of 105.3%.

Net interest margin was lower at 2.57% attributed to a contraction at CIMB Niaga.

As at March 31, 2018, total capital and common equity tier 1 ratios stood at 16.4% and 11.7%, respectively.

CIMB CEO Tengku Zafrul Aziz said the group is optimistic for the rest of 2018 and it is confident of achieving the T18 targets by end-2018.

"Plans to complete our presence in all 10 Asean countries are well on track, with our digital banking launch in Vietnam and the opening of our first branch in the Philippines. We expect continued growth momentum in Malaysia with further improvement in loan growth and asset quality across Indonesia, Thailand and Singapore."

He noted that CIMB is currently working on its next mid-term growth plan, which will be strongly premised on, among others, digital, innovation and sustainability.

"These, coupled with our strengthened capital position, disciplined cost management and continued focus on customer experience will ensure we continue to serve our stakeholders effectively, moving forward."

At 12.30pm, CIMB's share price fell 9 sen or 1.5% to RM5.97 on some 7.82 million shares done.