Profit ratio

CIMB’s Q1 net profit declines 42% YoY on one-time items booked a year ago and welfare tax

KUALA LUMPUR (May 31): CIMB Group Holdings Bhd’s net profit for the first quarter ended March 31, 2022 (1QFY22) fell 41.93% to RM1.43 billion from RM2.46 billion a year ago. is one year old, mainly due to recurring items recognized a year ago and the inclusion of the prosperity tax.

“On a reported basis that includes non-recurring exceptional items, CIMB Group’s operating result and net profit decreased 19.8% and 41.9% year-on-year (year-on-year) to RM4.74 billion and RM1.43 billion respectively The contraction was mainly due to the revaluation gain of RM1.16 billion on the deconsolidation of TNG Digital in 1QFY21 as well as the impact of Cukai Makmur at 1QFY22,” the bank’s stock market filing showed.

As a result, earnings per share fell to 13.96 sen in the quarter under review, from 24.76 sen in 1QFY21.

On a quarterly basis, however, CIMB performed better with reported operating profit up 3.3% to RM4.74 billion from RM4.6 billion, while reported net profit increased. rose 67% QoQ to RM1.43. billion RM854.51 million. This translates to a reported return on equity (ROE) on 1QFY22 of 9.6%, restoring the group to pre-pandemic performance levels, he added.

Its quarterly revenue fell 19.84% year-on-year to RM4.74 billion from RM5.91 billion a year earlier; however, it edged up 3.26% QoQ to RM4.59 billion. The Board of Directors declared no dividend for the quarter under review.

Excluding exceptional items, CIMB said it maintained its core operating profit before provisioning at RM2.51 billion, while core net profit increased positively by 16% year-on-year to RM1.55 billion , down from RM1.34 billion. The performance translates into a basic annualized ROE of 10.5% and basic earnings per share of 15.2 sen.

Core operating income for 1QFY22 was flat year-on-year, but increased 2.9% quarter-on-quarter to RM4.74 billion. Of this amount, net interest income (NII) increased by 3.8% year-on-year to RM3.55 billion, despite a slightly lower net interest margin (NIM) of 2.45%, mainly due to the group’s activities in Indonesia. Core non-interest income (NOII) was down 10.9% year-on-year to RM1.19 billion due to a weaker global investment environment.

Loan growth regained momentum, increasing by 4.9% year-on-year as the economic recovery positively impacted most markets and segments, particularly in retail banking where loans increased by 6.9% year-on-year.

Deposits also increased by 7% driven by strong Current Account Savings Account (CASA) growth of 9.9% year-on-year, resulting in a CASA ratio improvement of 42.3% recorded in March 2021 to 43.5% in March 22. The group’s capital position remains solid and above target with its Common Equity Tier 1 (CET1) ratio at 14.5% as of March 22, in up from 12.9% as of March 21 and 14.5% in December 2021.

Group cost/income ratio (CIR) improved to 47% from 51.6% in 4Q21 and 47.2% in 1Q21 as core operating expenses decreased by 0.8% year-on-year thanks to rigorous and continuous cost controls.

Total provisions also decreased significantly by 43.9% year-on-year, from RM756 million recorded in 1QFY21 to RM424 million in 1QFY22. This was driven by improved asset quality due to positive migration of clients from repayment assistance programs, as well as reversals of legacy loan takeovers.

In a statement, CIMB Group Managing Director Datuk Abdul Rahman Ahmad said the strong performance seen in the first quarter is a positive reflection of the economic recovery in its markets, as well as growing momentum across all segments of its business. activity.

Steady revenue growth, sustained cost control and the reduction of provisions contributed to the improvement in profitability. This was achieved despite the challenging investment environment as the world adjusts to geopolitical developments that have created macroeconomic headwinds and financial market volatility, he added.

“Our capital and liquidity positions as well as asset quality continue to strengthen, demonstrating the strength and resilience of our business franchise in the current operating environment. We are particularly encouraged to see the positive traction in loan growth as our portfolio remodeling strategy begins to bear fruit.

“At the same time, continuous cost optimization efforts have contributed to lower operating expenses and improved CIR, despite increased expenses related to technological and operational investments. We plan to spend RM1 billion in FY22 to drive digitalization and improve technology and operational resilience,” he added.

The group is optimistic about an improvement in its financial performance in 2022 given the expansion of activities thanks to the anticipated regional economic recovery.

He said he would continue to focus on asset quality and credit risk management across all segments and geographies, especially in customers and sectors impacted by the pandemic.

CIMB’s share price was 10 sen or 1.98% higher at RM5.15 at market close, with a market capitalization of RM53.94 billion.