PETALING JAYA: CIMB Group Holdings Bhd’s net profit for the first quarter ended March 31, 2020 (Q1’20) fell 57.4% to RM507.93 million from RM1.19 billion a year ago attributed to lower non-interest income (NOII) and higher provisions across selected markets.
Its revenue dropped marginally by 0.6% to RM4.14 billion against RM4.17 billion in the previous year’s same quarter.
The results translate to a net earnings per share of 5.1 sen and an annualised return on average equity of 3.7%.
Net interest income (NII) grew by 4.8%, underpinned by a 3.8% loan growth and operating expenses remained under control.
CIMB said loan growth stayed healthy across all markets and its current and savings account (Casa) ratio improved to 36.5%. Profitability was however, impacted by volatile trading conditions, lower FX income and isolated credits which gave rise to increased provisioning in selected markets.
“With the on-going crisis, CIMB has incorporated the necessary additional measures to quickly adapt to the pandemic and ensure resilience against an uncertain business environment. This includes prioritising staff safety with new working arrangements, working closely with customers to safeguard asset quality and increasing the intensity of our cost management initiatives,” CIMB said in a statement today.
The group’s Q1’20 operating income remained steady at RM4.14 billion. NII expanded by 4.8% year-on-year (y-o-y) with a marginally lower net interest margin of 2.44%, with spread compression across all operating countries. However, the group’s NOII declined by 15.5% y-o-y largely due to weaker trading and FX income from markets adversely impacted by Covid-19 at the tail-end of Q1’20. Operating expenses remained firmly under control, increasing by just 0.7% y-o-y, while the higher cost-to-income ratio of 56.0% was due to the weaker income during the quarter.
The group’s total gross loans was up by 3.8% y-o-y, with commendable growth across all core markets. Total deposits were 3.9% higher y-o-y, mainly contributed by strong performance in Singapore (+17.7%) and Thailand (+13.4%). In tandem, the group’s Casa ratio strengthened to 36.5%. The loan-to-deposit ratio stood at 91.2%, reflecting sustained strong liquidity. The group’s gross impairment ratio stood at 3.4% as at end-March 2020, with an allowance coverage of 75.9%.
“The first quarter was a challenging one and we foresee continued challenges for the rest of the year. Despite this, we are confident that the banking system is far more resilient today, given the lessons learnt from previous crises, and the reforms put in place as a result. This includes a better capitalised banking sector with sufficient buffers to be able to withstand the negative shocks of Covid-19,“ CIMB said.
The bank is accelerating digital initiatives and processes to provide a more seamless and convenient banking environment for customers in the new normal going forward.
“We remain committed to providing returns to our stakeholders and are confident that these measures, alongside CIMB’s well-established franchise and strong CET1 capital base of 12.5%, will ensure the group’s agility and ultimately, its long-term resilience in the face of the crisis.”
