CIMB Group announces RM3.41 billion Net Profit for 9M17

Stocks and Financial Services Press Releases Wednesday November 29, 2017 08:05
Bangkok--29 Nov--CIMB Thai Bank
  • Record quarterly operating income of RM4.42 billion in 3Q17
  • 9M17 PBT improved 24.6% Y-o-Y to RM4.57 billion underpinned by an 11.6% increase in operating income and lower provisions
  • 26.0% Y-o-Y growth in 9M17 net profit to RM3.41 billion with annualised ROE of 9.8%
  • Cost-to-Income ratio improved to 52.1% for 9M17 (cf. 54.6% in 9M16) with continuous cost management discipline
  • Loan growth of 7.0% Y-o-Y led by Consumer Banking
  • Strengthened Group CET1 ratio to 12.0% as of 30 September 2017
1) Summary

CIMB Group Holdings Berhad ("CIMB Group" or the "Group") today reported a Profit Before Tax ("PBT") of RM4.57 billion for the first 9 months of 2017 ("9M17"). On a year-on-year ("Y-o-Y") basis, the Group's 9M17 operating income expanded 11.6%, translating to a 17.9% Y-o-Y improvement in Pre-Provision Operating Profit ("PPOP") and a 26.0% Y-o-Y growth in Net Profit to RM3.41 billion. The 9M17 net Earnings Per Share ("EPS") stood at 38.1 sen, while the annualised 9M17 net Return On average Equity ("ROE") was 9.8%.

"We are continuing to show good progress across the Group, recording our highest ever quarterly operating income of RM4.42 billion in 3Q17, and generating a 26.0% Y-o-Y growth in 9M17 net profit. The improved performance was underpinned by positive net interest margins, gradually declining provisions and healthier capital market activity. In particular, our Consumer Banking franchise in Malaysia and Thailand, as well as Investment and Corporate Banking activities contributed to the respectable results for the quarter," said Tengku Dato' Sri Zafrul Aziz, Group Chief Executive, CIMB Group.

2) CIMB Group 9M17 Y-o-Y Results

CIMB Group's 9M17 operating income grew 11.6% Y-o-Y to RM13.11 billion largely driven by a 11.2% growth in non-interest income in line with better capital market activity and improved fee income. 9M17 net interest income rose 11.7% from loans growth and improved Net Interest Margin ("NIM"). Operating expenses was 6.3% higher Y-o-Y but only rose 2.9% after excluding foreign currency translation effects, with the Group's sustained cost management efforts. The positive JAW brought about the 17.9% improvement in the Group's PPOP. The Group's PBT was 24.6% higher at RM4.57 billion, with loan provisions declining 0.3% Y-o-Y.

The Group's Regional Consumer Bank PBT was 10.8% higher Y-o-Y in 9M17 at RM1.92 billion, making up 42% of Group PBT. Revenue growth was underpinned by a strong non-interest income performance while operating costs were under control and normalising provisions. The Regional Commercial Banking PBT declined by 14.2% Y-o-Y as the revenue expansion from strong non-interest income growth was offset by higher provisions. The Group's Regional Wholesale Banking PBT improved 64.6% Y-o-Y to RM1.85 billion from a combination of increased capital market activity, loans growth and lower provisions. Group Asset Management and Investments ("GAMI") PBT was 51.0% lower Y-o-Y without the equity accounting of the Bank of Yingkou, pending completion of its proposed sale. Group Funding PBT was 44.9% higher Y-o-Y from lower funding costs and FX translation gains.

Non-Malaysia PBT contribution to the Group rose to 33% in 9M17 compared to 25% in 9M16. Indonesia's PBT expanded by 67.1% Y-o-Y to RM966 million in tandem with the improving financial performance at CIMB Niaga. Thailand's PBT contribution of RM194 million was 33.8% higher Y-o-Y arising from lower provisions and operating expenses. Total PBT contribution from Singapore was 45.2% higher at RM289 million on the back of improved revenues.

The Group's total gross loans (excluding the bad bank) grew by 7.0% Y-o-Y, while total deposits grew 4.5% Y-o-Y. The Group's Loan to Deposit Ratio ("LDR") stood at 92.0% compared to 89.8% in 9M16.

The Group's gross impairment ratio stood at 3.5% as at end-September 2017, with an allowance coverage of 72.4%. The Group's Cost-to-Income ratio improved to 52.1% compared with 54.6% in 9M16, in line with stronger revenues and sustained cost management. The Group's NIM improved to 2.67% for 9M17 from better liability management across all countries.

As at 30 September 2017, CIMB Group's total capital ratio stood at 16.6% while the Common Equity Tier 1 ("CET1") capital ratio rose to 12.0%.
3) CIMB Group 3Q17 Q-o-Q Performance

On a quarter-on-quarter ("Q-o-Q") basis, 3Q17 operating income was 2.2% higher at RM4.42 billion buoyed by the 13.6% growth in non-interest income and partially offset by a 2.2% decline in net interest income. Consumer Banking PBT was 13.2% higher Q-o-Q largely due to a better performance in all countries. Regional Commercial Banking PBT declined by 69.2% Q-o-Q from lower revenue and increased provisions in 3Q17. Wholesale Banking PBT increased by 18.8% Q-o-Q mainly due to the better capital markets in 3Q17, lower operating expenses and loan provisions. GAMI PBT was 86.5% lower Q-o-Q due to the absence of investment gains and higher impairment, while Group Funding PBT increased by 24.4% due to higher FX gains. The Group's 3Q17 net profit was 2.6% higher Q-o-Q at RM1.13 billion owing to increased operating income and lower provisions.

4) CIMB Islamic

CIMB Islamic's 9M17 Y-o-Y PBT increased by 6.5% to RM577 million driven by the strong 14.5% operating income growth which was partially offset by increased impairments due to provision writebacks in 9M16. CIMB Islamic's gross financing assets increased by 22.9% Y-o-Y to RM53.8 billion, accounting for 16.5% of total Group loans. Total deposits increased by 17.6% Y-o-Y to RM60.7 billion.

5) Outlook

"We remain on track to meet our key financial targets for 2017. Whilst the trajectory of regional economies is generally positive and capital market activity is picking up gradually, we maintain our cautiously optimistic outlook and are mindful of keeping tight controls over asset quality and cost across all businesses. We are also pleased to have received our full banking licence to operate in the Philippines, which marks the completion of our ASEAN footprint," said Tengku Zafrul.

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