KUALA LUMPUR: CIMB Group Holdings Bhd posted a 36.4 per cent growth in net profit to RM872.83 million in its second quarter ended June 30 from RM639.75 million a year ago.
Despite this, the country’s second-largest banking group revised its loan growth target this year to between 6.0 and 7.0 per cent from 10 per cent previously and return-on-equity (ROE) to nine per cent from 10 per cent, but maintained all other targets.
“We have revised our initial loan growth target from 10 per cent to between 6.0 and 7.0 per cent this year because of the challenging operating environment,” said group chief executive Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
He said the ROE revision was in line with market expectations.
“However, all other targets like capital, cost and dividend payouts remain on track,” he said at a briefing on CIMB Group’s interim results, here, yesterday.
For the six months, the group’s net profit increased 1.7 per cent to RM1.67 billion from RM1.66 billion previously, thanks to improvement in its Indonesian operations and sustained cost management initiatives.
CIMB Group’s total loans expanded 6.6 per cent year-on-year, driven by consumer banking. Total deposits grew 7.1 per cent year-on-year, excluding foreign exchange fluctuations. Its loan-to-deposit ratio stood at 93.5 per cent compared with 94 per cent in the first half of last year.
The best performing sector was consumer banking, which recorded a 35.8 per cent increase in pre-tax profit year-on-year and 14 per cent quarter-on-quarter due to regional loan growth and lower overhead costs and provisions.
“Our consumer and wholesale banking divisions continue to perform well, especially with improved capital market activity in the second quarter.
“Regional consumer banking’s pre-tax profit grew 35.8 per cent year-on-year to RM1.2 billion, making 52 per cent of group pre-tax profit, which stood at RM2.3 billion. The better performance was fuelled by the regional consumer loan growth, lower overhead costs and lower provisions,” said Tengku Zafrul.
The group is optimistic about Indonesia.
“Indonesia’s pre-tax profit contribution grew 241.2 per cent year-on-year to RM331 million, in line with lower provisions at CIMB Niaga. This has helped the non-Malaysia pre-tax profit contribution to grow to 25 per cent in the first half from 23 per cent last year.
“We are very much upbeat on CIMB Niaga’s performance. We believe CIMB Malaysia and CIMB Singapore’s performance is expected to be subdued in line with the slower economic environment in both countries.”
CIMB Thailand’s pre-tax profit contribution was 15.2 per cent lower year-on-year at RM95 million due to the increased provisions while pre-tax profit from Singapore was also 36.8 per cent lower at RM132 million from increased commercial banking provisions.
In line with the rest of the industry, the group expects another Overnight Policy Rate cut this year.
Tengku Zafrul said CIMB Group had closed 22 branches in Malaysia since August last year, with one more closure scheduled, as part of the bank’s cost optimisation and digitisation processes.
“All affected staff have been relocated to other branches. We are not looking at opening new ones as we see digital optimisation is the way to go as we strengthen our market position. We have seen increase in productivity and efficiency once we adopted digitalisation and this is something we want to capitalise on,” he said.