3) CIMB Group 4Q14 Y-o-Y Results
The Group’s 4Q14 BAU operating income was 6.6% lower Y-o-Y at RM3.545 billion as the 6.7% increase in net interest income was offset by a 29.6% decline in non-interest income due to softer Treasury & Markets and lower fee-based income from CIMB Niaga. However, 4Q14 net profit was 76.0% lower Y-o-Y at RM252 million largely due to higher corporate banking loan impairments in Indonesia and Malaysia.
4) CIMB Group 4Q14 Q-o-Q Results
On a Q-o-Q basis, the 4Q14 operating income grew 0.5% to RM3.545 billion with the 2.6% growth in net interest income was partially offset by a 4.8% decline in non-interest income from slower capital market activity. However, 4Q14 net profit was 71.7% lower Y-o-Y at RM252 million largely due to higher corporate banking loan impairments in Indonesia and Malaysia.
5) CIMB Islamic
CIMB Islamic’s Y-o-Y PBT increased by 7.1% to RM526 million due to improved Islamic capital markets activity. CIMB Islamic’s gross financing assets increased by 3.4% Y-o-Y, accounting for 13.8% of total Group loans. Total deposits grew by 7.3% Y-o-Y to RM41.3 billion.
6) Other Highlights
On the M&A front, CIMB Group decided to abort the proposed merger discussions with RHB Capital Berhad and Malaysia Building Society Berhad in light of the economic conditions.
In FY14, CIMB Group commenced CIMB Bank branch operations in Hong Kong and Shanghai to facilitate transaction banking requirements of our ASEAN corporate customers. CIMB Thai opened its branch in Laos in July 2014.
7) Target 18 (“T18”) And Key Organisation Changes
On 26 February 2015, Tengku Dato’ Zafrul Tengku Abdul Aziz was appointed as Group CEO. Dato’ Sri Nazir Razak had taken over as Chairman of CIMB Group on 1 September 2014.
On 6 February 2015, CIMB Group Holdings outlined its new T18 plans and key organization changes, with a mid-term target of achieving an ROE of 15%, CET1 ratio of over 11%, a cost to income ratio of below 50% and a 60% consumer banking income contribution by end-2018. The reorganisation exercise will see the creation of new regional divisions, key management changes across the Group, several retirements and will entail forthcoming appointments of new CEOs at CIMB Niaga and Group Asset Management & Investments and a Group Chief Compliance Officer.
As part of the T18 initiative, the Group announced its decision to close its offices in Sydney and Melbourne in Australia. This follows a strategic review of the Group's entire business and to align with its objective of reducing its Asia Pacific investment banking and equities operating cost by 30% in 2015.
8) Outlook
“We go into 2015 with a significantly strengthened capital position, allowing us to better handle the banking industry headwinds. The growth prospects for emerging markets are softer this year and we are making 2015 a year of recalibration with the T18 initiatives providing a platform to make some difficult decisions to streamline operations, implement management and organizational changes to future proof CIMB. Costs will be a primary focus and we have started to streamline our operations and align our cost structures with market realities,” said Tengku Zafrul.
Growth prospects for CIMB Malaysia should track the slower economic environment and moderation in consumer spending. CIMB Singapore is expected to perform positively with continued business expansion amidst steady economic growth, while the outlook for CIMB Thai suggests a gradual improvement in line with the expected economic recovery. Indonesia remains challenged by tight liquidity and slower asset growth although economic reforms are expected to gain traction from 2H15. The Group’s Treasury & Markets and Investment Banking businesses will have to maneuver difficult capital markets conditions given the volatile and unpredictable global markets,” said Tengku Zafrul.
