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29 November 2018


 

  • Record 9M18 net profit of RM4.47 billion (+30.8% Y-o-Y) bolstered by RM928 million gain on sale of 20% of CPAM and 10% of CPIAM resulting in an ROE of 11.6% and an improved CIR of 48.0%
  • BAU PBT of RM4.76 billion mainly from lower operating cost and provisions
  • Robust loan growth supported by 11.0% Y-o-Y growth in Malaysia
  • Improved loan loss charge of 0.45% in 9M18 (cf. 0.68% in 9M17)
  • Strengthened Group CET1 ratio to 12.3% as at 30 September 2018

1) Summary


CIMB Group Holdings Berhad (“CIMB Group” or the “Group”) today reported a net profit of RM4.47 billion for the first 9 months of 2018 (“9M18”) bolstered by a gain from the sale of 20% of CIMB-Principal Asset Management (“CPAM”) and 10% of CIMB-Principal Islamic Asset Management (“CPIAM”) amounting to RM928 million. This raised the Group’s 9M18 Return On average Equity (“ROE”) to 11.6%, and reduced its Cost-to-Income Ratio (“CIR”) to 48.0%.  

 

On a Business-As-Usual (“BAU”) basis, Profit Before Tax (“PBT”) was RM4.76 billion for 9M18 representing a 4.0% year-on-year (“Y-o-Y”) growth. Lower Y-o-Y operating expenses of 6.4% and loan loss provisions of 30.7% contributed to the Group’s increase in 9M18 BAU net profit by 3.6% Y-o-Y to RM3.54 billion. This was achieved despite a 5.6% Y-o-Y drop in operating income due to weaker capital markets in Malaysia. The 9M18 net earnings per share (“EPS”) stood at 38.0 sen, while the annualised ROE was 9.8%.

 

“We are pleased to deliver a record PBT of RM5.69 billion in 9M18 despite the challenging operating landscape. The good 9M18 performance was underpinned by lower provisions and costs, continued improvement from Consumer and Commercial banking, as well as a recovery in Wholesale banking revenue in 3Q18,” said Tengku Dato’ Sri Zafrul Aziz, Group Chief Executive, CIMB Group.
 

2) CIMB Group 9M18 Y-o-Y Performance (BAU basis)
 

CIMB Group’s 9M18 operating income was 5.6% lower Y-o-Y at RM12.38 billion from a 10.0% decline in non-interest income from slower capital markets in Malaysia in 2Q18 and a 3.7% decline in net interest income mainly from Commercial and Wholesale banking. This was offset by a RM163 million gain from the sale of 50% of CSI from 1H18. The Group’s PBT was 4.0% higher Y-o-Y at RM4.76 billion, with operating expenses and loans provisions declining by 6.4% and 30.7% YoY, respectively. The 9M18 CIR stood at 51.6%.

 

The Group’s Consumer Bank PBT was 23.1% higher Y-o-Y in 9M18 at RM2.36 billion, making up 49% of Group PBT. The better performance was attributed to 53.2% lower provisions with revenue growth underpinned by steady net interest income and non-interest income growth. The Commercial Banking PBT increased by 69.4% Y-o-Y from its regional business recalibration, although the lower cost and provisions were partially offset by a decline in operating income. PBT at the Group’s Wholesale Banking division was RM1.27 billion or 31.3% lower Y-o-Y from the significantly weaker capital markets in 2Q18 and higher provisions. Group Asset Management and Investments (“GAMI”) PBT improved 52.6% Y-o-Y from better performances in both public and private markets, with a 14.4% increase in public markets assets under management. Group Funding PBT increased 17.2% Y-o-Y mainly from the RM163 million gain arising from the sale of 50% of CSI.

Profit and Loss Summary (RM ‘mil)

9M18 BAU*

9M17

Y-o-Y

Operating Income

12,379

13,111

(5.6%)

Operating expenses

(6,387)

(6,826)

(6.4%)

PBT

4,760

4,575

4.0%

Net profit

3,538

3,415

3.6%

PBT by Segments (RM ‘mil)

9M18 BAU*

9M17

Y-o-Y

Consumer Banking

2,358

1,915

23.1%

Commercial Banking

471

278

69.4%

Wholesale Banking

1,268

1,845

(31.3%)

Corporate Banking

864

1,126

(23.3%)

Treasury & Markets

346

658

(47.4%)

Investment Banking

58

61

(4.9%)

GAMI

145

95

52.6%

Group Funding

518

442

17.2%

Notes: * Excludes CPAM & CPIAM gain of RM928mil
 

 

Non-Malaysia PBT contribution to the Group stood at 35% in 9M18 compared to 33% in 9M17. Indonesia’s PBT decreased by 5.3% Y-o-Y to RM915 million. However, excluding FX translation effects, Indonesia’s PBT expanded 8.7% Y-o-Y in line with CIMB Niaga’s improving performance. Thailand's PBT contribution of RM356 million was a 83.5% Y-o-Y increase mainly from improvements in Consumer and lower provisions. Total PBT contribution from Singapore was 14.2% higher Y-o-Y at RM330 million mainly from savings on the deconsolidation of CSI.

Gross Loans (RM ‘bil)

Sep-18

Sep-17

Y-o-Y

Consumer Banking

175.4

166.4

5.4%

Commercial Banking

43.6

42.7

2.1%

Wholesale Banking

119.4

113.6

5.1%

Total *

338.4

322.7

4.9%

By Geography

Y-o-Y

Malaysia 

11.0%

Indonesia ^

2.2%

Thailand ^

5.5%

Singapore ^

3.9%
Others** 0.1%

Group^^

7.3%

Deposits (RM ‘bil)

Sep-18

Sep-17

Y-o-Y

Consumer Banking

169.4

166.7

1.6%

Commercial Banking

40.3

45.4

(11.2%)

Wholesale Banking

157.3

141.9

10.9%

Total

367.0

354.0

3.7%

Notes:

* Gross loans excludes bad bank

^ In local currency

** Including Labuan, London, Cambodia, Vietnam, Hong Kong & Shanghai

^^ Excluding FX fluctuation

By Geography

Y-o-Y

Malaysia

4.4%

Indonesia ^

3.8%

Thailand ^

5.6%

Singapore ^

8.7%
Others **

38.0%
Group ^^ 6.0%

The Group’s total gross loans (excluding the bad bank) grew by 4.9% Y-o-Y (+7.3% excluding FX effects), while total deposits were 3.7% higher Y-o-Y. The Group’s Loan to Deposit Ratio (“LDR”) stood at 93.1%, compared to 92.0% as at end-September 2017.

 

The Group’s gross impairment ratio stood at 3.1% as at end-September 2018, with an  allowance coverage of 107.1%. The Group’s Cost-to-Income Ratio improved to 51.6% compared with 52.1% in 9M17, in line with continued cost management. The Group’s Net Interest Margin (“NIM”) was lower at 2.52% attributed to the contraction at CIMB Niaga.

Key Operating Ratios (%)

9M18 BAU*

9M17

Loan to Deposit (LDR)

93.1

92.0

Gross Impaired Loans Ratio

3.1

3.5

Allowance Coverage ^

107.1

85.3

Cost-to-Income

51.6

52.1

NIM ~**

2.52

2.67

Notes: * Excludes CPAM & CPIAM gain of RM928mil

         ** Daily Average

           ~ Annualised               

           ^ Including regulatory reserve

 

As at 30 September 2018, CIMB Group’s total capital ratio stood at 16.9% while the Common Equity Tier 1 (“CET1”) capital ratio stood at 12.3%.

 

3) CIMB Group 3Q18 Q-o-Q Performance

Profit and Loss Summary (RM ‘mil)

3Q18

2Q18 BAU*

3Q17

Q-o-Q

Y-o-Y

Operating Income

4,140

3,936

4,423

5.2%

(6.4%)

Overhead expenses

(2,159)

(2,087)

(2,267)

3.4%

(4.8%)

PBT

1,486

1,531

1,528

(2.9%)

(2.7%)

Net profit

1,180

1,053

1,132

12.1%

4.2%

Notes: * Excludes CPAM & CPIAM gain of RM928mil

 

On a quarter-on-quarter (“Q-o-Q”) basis, 3Q18 operating income was 5.2% higher at RM4.14 billion from the better markets in 3Q18 leading to a 13.4% increase in non-interest income. Consumer Banking PBT declined 2.1% Q-o-Q from lower operating income and higher costs. Commercial Banking PBT was 1.7% higher Q-o-Q due to improved operating income and lower provisions. Wholesale Banking PBT was lower by 16.5% Q-o-Q largely attributed to higher provisions, as operating income improved in the quarter. GAMI PBT increased by 12.5% from both private and public markets, while Group Funding PBT was 25.2% higher mainly from reduced provisions. The Group’s 3Q18 net profit grew 12.1% Q-o-Q driven by better operating income from Commercial and Wholesale.

 

On a Y-o-Y basis, the 6.4% operating income decline in 3Q18 was attributed to a decline in non-interest income and net interest income of 17.0% and 1.6%, respectively. Consumer Banking PBT grew 3.9% Y-o-Y from better cost management. Regional Commercial Banking PBT rose 450.0% Y-o-Y from the reduction in provisions. Wholesale Banking PBT was 41.7% lower Y-o-Y across all wholesale segments given the weaker capital markets. GAMI PBT was 542.9% higher Y-o-Y from improvement in private markets, while Group Funding 3Q18 PBT was flat Y-o-Y. The Group’s 3Q18 net profit increased by 4.2% Y-o-Y to RM1.18 billion largely attributed to all segments except Wholesale banking.

PBT by Segments (RM ‘mil)

3Q18

2Q18 BAU*

3Q17

Q-o-Q

Y-o-Y

Consumer Banking

747

763

719

(2.1%)

3.9%

Commercial Banking

176

173

32

1.7%

450.0%

Wholesale Banking

354

424

607

(16.5%)

(41.7%)

Corporate Banking

167

364

345

(54.1%)

(51.6%)

Treasury & Markets

170

53

212

220.8%

(19.8%)

Investment Banking

17

7

50

142.9%

(66.0%)

GAMI

45

40

7

12.5%

542.9%

Group Funding

164

131

163

25.2%

0.6%

Notes: * Excludes CPAM & CPIAM gain of RM928mil

4) CIMB Islamic

 

CIMB Islamic’s 9M18 PBT increased by 31.5% Y-o-Y to RM759 million, driven by strong 23.6% operating income growth due to a healthy balance sheet growth. CIMB Islamic’s gross financing assets increased by 31.8% Y-o-Y to RM70.9 billion, accounting for 20.8% of total Group loans. Total deposits (including investment account) increased by 21.6% Y-o-Y to RM74.4 billion.

5) Outlook

 

“As 2018 draws to a close, we remain on track to meet our key T18 targets. However, we remain cautious amidst weaker regional economies and global trade tensions. Against this backdrop, we will continue to control asset quality and cost across all businesses and geographies, while we finalise our next mid-term plan to propel CIMB onto a stronger growth trajectory,” said Tengku Zafrul.

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