Malaysia’s CIMB Group net profit up 18.1% in Q2

CIMB Group Holdings, Malaysia’s second largest bank by asset size in Malaysia, saw its net profit for the second quarter ended June 30, 2022 rose 18.1 per cent to RM1.3 billion (S$404 million), from RM1.1 billion in the year-ago period, driven by strong asset growth and lower provisions.

Revenue in the second quarter increased 6.5 per cent to RM4.9 billion, from RM4.6 billion in the same quarter a year before.

CIMB announced the first interim dividend of 13 sen per share, representing  a dividend payout ratio of 50 per cent.

At a results briefing on Tuesday (Aug 30), CIMB group chief executive officer Abdul Rahman Ahmad attributed the growth to positive performance across all business segments and key markets – Malaysia, Singapore, Indonesia and Thailand – thanks to higher operating income, continued cost discipline and significantly lower provisions.

For the first 6 months of FY 2022, CIMB’s revenue dipped 8.5 per cent to RM9.6 billion, from RM10.5 billion same period a year ago. First half net profit was RM2.7 billion, declined 22.8 per cent from RM3.5 billion in the year-ago, largely due to a one-off non-recurring item of RM1.16 billion booked a year ago and the recognition of the prosperity tax.

Nevertheless, Abdul Rahman noted that the banking group’s underlining business remained resilient and the recalibrated strategy - Forward23+ - also showed positive outcome that contributed to the income growth for the second quarter.

Abdul Rahman said the recalibrated strategy, which was introduced last year, has helped improve the group’s profitability in the first half and reshaped its portfolio key markets including Indonesia and Thailand.  

Malaysia’s business has recorded a profit before tax of RM2.5 billion, an increase of 4.7 per cent, due to lower consumer and corporate provisions.

In Singapore, the banking group’s profit before tax has increased 23.7 per cent year-on-year to RM426 million in the first 6 months of FY 2022, mainly driven by improved commercial banking writebacks.

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The banking group saw its Indonesian profit before tax climbed 25.6 per cent to RM1.02 billion, driven by strong trading income and lower provisions.

In Thailand, the banking group’s profit before tax surged 144.3 per cent to RM336 million, thanks to the higher trading and fee income as well as lower provisions.

Looking forward, CIMB group chief financial officer Khairul Rifaie expects Bank Negara Malaysia to increase the interest rate by 50 basis points in the remaining months of 2022.

“Rising interest rates will affect the demand for loans as the cost of borrowing is getting more expensive. However, we do not expect a severe impact as the country is on a recovery path,” said Abdul Rahman, adding that the banking group is confident to achieve its loan growth target of 5 to 6 per cent in this financial year.