CIMB Group announces RM2,312 million Profit Before Tax for 1HFY16

1) Summary

CIMB Group Holdings Berhad (“CIMB Group” or the “Group”) today reported a Profit Before Tax (“PBT”) of RM2,312 million for the first half of 2016 (“1H16”). On a year-on-year (Y-o-Y) basis, the Net Profit of RM1,687 million improved 1.7% compared to the Business As Usual (“BAU”) 1H15 Net Profit of RM1,659 million. The 1H16 net earnings per share (“EPS”) stood at 19.6 sen, while the annualised 1H16 net return on average equity (“ROE”) was 8.1%. The Group declared a first interim net dividend of 8.00 sen per share to be paid via cash or an optional Dividend Reinvestment Scheme (“DRS”). The total interim dividend amounts to a net payment of RM698 million, translating to a dividend payout ratio of 41.4% of 1H16 profits. The Group had announced a special interim dividend-in-specie equivalent to 2.00 sen per share involving the distribution of CIMB Niaga B Shares to CIMB Group shareholders on a ratio of 1 CIMB Niaga share for approximately every 6.39 CIMB Group shares.

“Our Consumer and Wholesale Banking divisions continue to perform well, especially with improved capital market activity in 2Q. Strict cost controls resulted in a 0.7% Y-o-Y decline in operating costs and coupled with the improved revenues, our 1H16 net profit was 1.7% better Y-o-Y. Our CET1 capital ratio strengthened to 10.7% and is on-track toward our year-end target of 11%. We have also proposed a 40% dividend payout of 8 sen per share for the first half of this year. Given the macroeconomic conditions, we are pleased with our 1H16 performance," said Tengku Dato’ Sri Zafrul Aziz, Group Chief Executive, CIMB Group.

2) CIMB Group 1H16 Y-o-Y Results

For comparative purposes, the corresponding 1H15 numbers are based on BAU basis. CIMB Group’s 1H16 operating income grew 1.5% Y-o-Y to RM7,628 million underpinned by a 6.5% improvement in net interest income but partially offset by a 9.1% decline in non-interest income, which was impacted by the weaker capital market, particularly in 1Q16. Operating expenses declined 0.7% Y-o-Y but was 4.3% lower after excluding foreign currency translation effects, a reflection of the Group’s stricter cost controls. This brought about the 4.5% improvement in the Group’s Pre-Provisioning Operating Profit (“PPOP”). The Group’s PBT was 3.9% higher at RM2,312 million, with loan provisions 1.1% lower Y-o-Y.

The Group’s regional Consumer Bank PBT increased by 35.8% Y-o-Y in 1H16 to RM1,192 million, making up 52% of Group PBT. The better performance was fuelled by the regional consumer loans growth, lower overhead costs and lower provisions. The regional Commercial Banking PBT was 16.7% lower Y-o-Y at RM230 million largely attributed to higher provisions in Thailand, Indonesia and Singapore. The Group’s Regional Wholesale Banking PBT improved by 6.2% Y-o-Y to RM859 million underpinned by a recovery in Treasury & Markets, with Corporate Banking and Investment Banking staying weak. Group Asset Management and Investments (“GAMI”)’s PBT expanded 8.3% Y-o-Y due to higher contributions from investments, while Group Funding PBT was 186.2% lower Y-o-Y from higher costs of funding and foreign exchange effects on investments.