You are here
CIMB reports 81% drop in profit on provisions for bad loans
[KUALA LUMPUR] CIMB Group Holdings, Malaysia's second- largest bank by assets, posted an 81 per cent drop in profit last quarter on provisions for bad loans and signaled a continued focus on controlling costs.
Net income dropped to 200.3 million ringgit (US$56 million) in the three months through December, from 1.04 billion ringgit a year ago, the company said in a stock exchange filing today. Revenue fell 3.3 per cent to 3.67 billion ringgit.
CIMB announced plans this month to close its Australian offices to help reduce investment banking costs by about 30 per cent this year in anticipation of slower growth. The company will also cut about 50 equities-related jobs in places including Hong Kong, Taiwan, India and South Korea, people familiar with the plan said Thursday.
"The growth prospects for emerging markets are softer this year," Group chief executive officer Tengku Zafrul Aziz told reporters in Kuala Lumpur. "Costs will be a primary focus and we have started to streamline our operations and align our cost structures with market realities." Provisions for loan impairments were mainly related to coal-related sectors in Indonesia, Tengku Zafrul said, without specifying the industries for those made in Malaysia. The bank sees loan provisions remaining elevated in the first quarter before normalizing in the next.
Shares of the Kuala Lumpur-based lender have fallen more than 16 per cent over the past year, compared with a 0.6 per cent decline in the benchmark FTSE Bursa Malaysia KLCI Index.
CIMB is reducing costs after previously expanding by purchasing some Royal Bank of Scotland Group Plc operations in 2012. Tougher regulations and higher capital requirements are putting pressure on financial companies globally, with Standard Chartered, CLSA and Nomura Holdings among those to cut staff in Asia.
CIMB and smaller rivals RHB Capital and Malaysia Building Society agreed in January to scrap a three-way merger that would have created the country's largest banking group, citing economic conditions.