Highlight CIMB 1QFY14 profit falls 23% yoy, if 1QFY13’s extraordinary gain included

by **Cals** Fri 23 May 2014, 00:19

Highlight CIMB 1QFY14 profit falls 23% yoy, if 1QFY13’s extraordinary gain included

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 22 May 2014 18:30

KUALA LUMPUR (May 22): CIMB Group Holdings Bhd’s net profit rose 4.4% year-on-year (y-o-y) to RM1.07 billion in the first quarter ended March 31, 2014, from RM1.02 billion (without extraordinary gain) in first quarter of last year (1Q13).

The banking group said gain of 4% was based on “business as usual”.

But the net profit for this quarter fell 23% y-o-y if the net profit of the first quarter of 2013 took into consideration a net gain of RM365 million from the sale of CIMB Aviva to achieve profit of RM1.385 billion, said the banking group in a statement.

The group saw lower profit contribution from Indonesia, which was hit by fall in rupiah, and higher provisions made for Thailand’s operation.

For the first quarter of 2014, revenue fell 10.3% y-o-y to RM3.54 billion from RM3.95 billion.

In a statement, CIMB’s group CEO Datuk Seri Nazir Razak said: “We had a decent start to the year given the weaker than expected capital markets and lower contribution from Indonesia.”

“We grew strongly in Singapore and are ahead of targets at our regional corporate banking and Malaysia and Singapore Consumer Bank.”

CIMB said net interest income was 6.3% higher while non-interest income declined by 2.9%, due to softer treasury & markets and weak equity markets.

On a y-o-y basis, the group said the decline in rupiah impacted CIMB Niaga’s earnings contribution to the group by 12.4%.

It said overall, the contribution of the group’s core corporate and consumer banking business had increased to 70% of total profit before tax from 65%.

CIMB said the group’s total gross loans, excluding the declining bad bank loan book, had expanded 12.4% y-o-y after adjusting for foreign exchange fluctuations.

On total deposits, the group said it was flat y-o-y, but 1.8% higher after excluding foreign exchange fluctuation.

CIMB added the group’s total loan impairment of RM111 million in the first quarter jumped 37.0% y-o-y from RM81 million due to significantly lower recoveries and write-backs as well as increased provisioning in CIMB Thai.

In Indonesia, CIMB Niaga reported a 1QFY14 net profit of IDR1,098 billion, a 4.2% y-o-y increase, with a 1QFY14 net return on equity of 16.7%.

In Thailand, CIMB Thai announced a 40.8% y-o-y growth in net profit to THB441 million for 1Q FY14, underpinned by strong loans growth, improved net interest margin, expansion in non-interest income.

“The operating environment in the regional capital markets including Indonesia as a whole remains challenging. We also have to adjust our growth expectations in Thailand as political tensions show little sign of abating,” said Nazir on outlook.

“We are focused on optimising our balance sheet by deploying our newly enlarged capital base, as well as managing margins and operating costs.”