Update CIMB Group posts record RM3.52b net profit in FY10, RM877.6m in 4Q

KUALA LUMPUR: CIMB Group Holdings Bhd posted record net profit of RM3.52 billion in the financial year ended Dec 31, 2010 while for the fourth quarter, it was RM877.62 million, boosted by its Indonesian operations.
It said on Friday, Feb 25 the 4Q net profit was 9.3% higher from the RM802.89 million a year ago. However, it was 4.1% lower than the 3Q10 net profit of RM916 million.
Revenue rose 16% to RM3.168 billion from RM2.731 billion. Earnings per share were 11.83 sen compared with 11.37 sen.
It proposed dividend of eight sen per share amounting to a total net payment of RM595 million. This brings the total dividends for FY10 to RM1.933 billion or 26.08 sen per share, representing a 55% dividend payout and higher than the target of 9.25 sen per share.
"We had a very good year and are pleased to be able to reward shareholders with a record dividend pay-out,” said group chief executive of CIMB Group, Datuk Seri Nazir Razak.
““This is a perfect way to mark the final year of our 5-year transformation from a Malaysian investment bank to an Asean universal bank, underpinned by the turnaround in our Malaysian consumer bank, benefits from cross-divisional synergies and surge in contribution from CIMB Niaga.”
For FY10, its net profit rose 25.4% to RM3.52 billion from RM2.80 billion. It revenue increased by 12.6% to RM11.81 billion from RM10.48 billion. The FY10 net return on equity (ROE) of 16.3% was above the group’s full-year target of 16.0%.
However, CIMB Group said it would have to contend with quite different operating conditions in the region for 2011; slower economic growth, rising interest rates and more volatile capital markets.
“Nevertheless, the Group is setting itself a higher ROE target of 17% for 2011. The Group will look to new areas for strong growth, such as regional transaction banking, CIMB Singapore and CIMB Thai.
“Meanwhile, after five years it is also timely for the Group to refresh its more established franchises in Malaysia and Indonesia to sharpen their competitive edge. CIMB Group has set targets of total region-wide loan and deposits growth of 18% and 20% respectively.
Elaborating on the FY10 financial performance, CIMB Group said the profit before tax from its corporate and investment banking operations jumped 71.2% on-year at RM1.149 billion in tandem with the more robust regional capital markets and several major transactions over the past 12 months.
Profit before tax at treasury and investments were 17.5% lower on-year to RM1.217 billion mainly due to lower investment profits.
The group’s Malaysian consumer bank profit before tax declined by 16.9% on-year. However, excluding the one-off general provision write-back in 4Q09 ahead of FRS139 implementation, the Malaysian consumer bank’s FY10 profit before tax.
CIMB Group said CIMB Niaga’s contribution surged 99.7% on-year to RM1.572 billion from RM787 million previously due to operational improvements and favourable operating conditions.
CIMB Thai’s profit before tax was flat on-year at RM47 million as provision coverage was improved.
Asset management and insurance profit before tax was 38.3% lower on-year at RM87 million largely due to the non-recurrence of gains on change in accounting standards at CIMB Aviva in 2009.
“CIMB Niaga was the largest contributor to FY10 group profit before tax at 34% versus 21% in the previous corresponding period,” it said.
The Malaysian consumer bank’s contribution to group profit before tax fell to 12% compared to 18% in FY09, while treasury and investments declined to 26%.
The group’s total gross loans expanded 12.4% on-year, largely driven by the 18.0% expansion (in ringgit terms) of CIMB Niaga’s gross loans and the 15.3% growth in Malaysian consumer loans.
Mortgages, credit cards and micro credit lending in Malaysia grew by 20.7%, 40.6% and 13.6% respectively on-year.
Hire purchase loans grew by 10.6% on-year but commercial banking loans continued to decline by 1.1% on-year. Corporate loans improved by 1.8% on-year. The group's overall net interest margins improved to 3.32% from 3.28% last year