CIMB Group Holdings Bhd reported a Profit Before Tax (“PBT”) of RM1.74 billion for the first quarter of 2018 (“1Q18”) – representing a 8.0% year-on-year (“Y-o-Y”) growth on the back of lower operating expenses of 6.8% Y-o-Y and a 5.4% Y-o-Y decline in loan loss provisions.
Operating income was 1.3% lower Y-o-Y from lower net interest income and the deconsolidation of CIMB Securities International (“CSI”), partially offset by a RM152 million gain arising from the CSI sale.
The Group’s 1Q18 net profit improved 10.7% Y-o-Y to RM1.31 billion, translating into a net Earnings Per Share (“EPS”) of 14.2 sen and an annualised Return On average Equity (“ROE”) of 10.2%.
“We are pleased to announce a net profit of RM1.31 billion, an increase of 10.7% Y-o-Y, on the back of sustained cost discipline, lower provisions and a RM152 million gain from the disposal of 50% of CIMB Securities International. Commercial Banking’s recalibration is progressing well, while the Wholesale Banking business tracked weaker capital markets in 1Q18. Consumer Banking, however, had a great start, posting a 51.2% Y-o-Y PBT growth,” said Tengku Dato’ Sri Zafrul Aziz, Group CEO, CIMB Group.
“Our capital position is solid even after adoption of MFRS9, with a CET1 of 11.7%. The cost to income ratio improved to 49.8%, below our 50% year-end target, as operating expenses remained under control across all segments,” continued Tengku Zafrul.
CIMB Group’s 1Q18 operating income was 1.3% lower Y-o-Y at RM4.30 billion mainly from a 3.5% decline in net interest income. This was offset by a 3.8% Y-o-Y improvement in non-interest income underpinned by a RM152 million gain from the sale of 50% of CSI.
Continued cost management initiatives brought about the 6.8% Y-o-Y decline in operating expenses, resulting in the fourth consecutive quarter of positive JAW. The Group’s PBT was 8.0% Y-o-Y higher at RM1.74 billion, with loan provisions declining 5.4%.
The Group’s Consumer Bank PBT was 51.2% higher Y-o-Y in 1Q18 at RM848 million, making up 49% of Group PBT. Consumer revenue growth was driven by a robust non-interest income performance, with net interest income growing steadily and costs remaining well managed.
The Commercial Banking PBT declined by 14.1% Y-o-Y in line with the regional business recalibration with the lower revenue partially offset by a decline in costs and provisions.
PBT at the Group’s Wholesale Banking division was RM490 million or 32.6% lower Y-o-Y largely due to the comparatively weaker capital market activity in 1Q18.
Group Asset Management and Investments (“GAMI”) PBT improved 66.7% Y-o-Y from better performances in the asset management and private markets businesses. Group Funding PBT increased 50.7% Y-o-Y from the gain arising from the sale of 50% of CSI.