PETALING JAYA: CIMB Group Holdings Bhd’s net profit plunged 80.8% to RM194.44 million for the third quarter ended Sept 30, 2020 from RM1.01 billion reported previously on the back of lower profits from a lower net interest margin (NIM) and net interest income (NII) from some of its segment and a loss reported by its commercial banking segment.
Its revenue stood at RM4.46 billion, a slight decrease of 3.7% from RM4.64 billion reported previously.
The group’s NII and non-interest income (NOII) increased by 10% and 32.9% on a quarterly basis to RM3.23 billion and RM1.24 billion respectively.
It explained that the strong growth in NOII was due to improved trading and FX activity in 3Q’20.
CIMB stated that the challenging operating environment from the ongoing Covid-19 pandemic continued to affect its performance.
It pointed out that elevated provisions in key markets on specific accounts to strengthen the balance sheet, adjustments due to macro-economic factors and modification loss arising from the moratorium given to borrowers in Malaysia also impacted performance.
However, the group’s underlying business remains resilient as operating income grew quarter-on-quarter (qoq) across nearly all segments, with gross loans and deposits increasing by 1.6% and 6.1% respectively, while the CASA ratio strengthened to 40.0%.
Its total gross loans and total deposits contracted marginally, declining by 0.9% and 0.4% qoq respectively as at September 2020, while the loan-to-deposit ratio stood at 87.7%, a slight decrease from 88.2% in the preceding quarter.
Meanwhile, CIMB’s NIM rose 16 basis points (bps) to 2.31% from the previous quarter and its gross impaired loans (GIL) stood at 3.4% at end-September, a slight improvement from 3.6% reported at end-June.
On a quarterly basis, its loan impairments rose by 3.4%, largely due to additional provisioning overlay and those related to Covid-19, with allowance coverage rising to 93.9% in 3Q’20. Annualised 9M’20 loan loss charge stood at 1.44%
Its consumer banking segment saw operating income increased by 25.5% from the previous quarter, as its NII and NOII grew by 22.1% and 39.3% with the growth of the latter attributed to improved wealth management and bancassurance fees.
On the other hand, the group’s wholesale banking saw operating income rose 7.7% in the quarter attributed to a 22.3% growth in NOII and 1.7% growth in NII. The improved performance was primarily driven by stronger treasury & markets operations and improved investment banking activity.
Its digital assets & group funding saw operating income up 36.3% qoq with NII and NOII growing by 9.3% and 63.0% respectively and its islamic banking segment’s operating income grew 68.4% qoq as net financing income grew 73.7% due to financing growth and lower modification loss, while non-financing income rose by 44.5% from improved trading/FX income and higher fee-related income.
CIMB group CEO Datuk Abdul Rahman Ahmad commented that the quarter’s performance came within expectation due to the continued impact of the pandemic, and the 4Q20 economic outlook remains subdued given the resurgence in Covid-19 cases domestically and globally.
Moving forward, he stated that the group will accelerate investments in focus areas with high growth potential where it has already established a unique value proposition and leverage on economic recovery.
“In order to ensure our business remains resilient against shocks, we will sharpen our focus on cost optimisation, prudent capital management and proactive measures to strengthen asset quality,” he said in a press release.
For the first three quarters of 2020, the group’s net profit plummeted 73.6% to RM979.45 million from RM3.71 billion reported for the same period of the previous year.
Revenue for the period slipped 6% to RM12.47 billion from RM13.27 billion reported previously.
