KUALA LUMPUR (Aug 30): CIMB Group Holdings Bhd’s net profit for the second quarter ended June 30, 2021 (2QFY21) retreated 55.88% to RM1.08 billion from RM2.46 billion in the immediate preceding quarter.
In a bourse filing, the group attributed the drop in earnings mainly due to the high base results of 1QFY21, which came on the back of a one-off revaluation gain of RM1.16 billion from the deconsolidation of TNG Digital, which was partially offset by RM258 million mainly related to the write-off and accelerated amortisation of intangible assets in 2QFY21.
As a result, earnings per share fell to 10.80 sen in the quarter under review, from 24.76 sen in 1QFY21.
The group has proposed a first interim dividend of 10.44 sen per share, to which it has proposed a dividend reinvestment scheme (DRS) to allow its shareholders to reinvest their dividends in new CIMB shares.
Its quarterly revenue dropped 21.59% quarter-on-quarter (q-o-q) to RM4.67 billion, from RM5.96 billion in 1QFY21.
Excluding the one-off revaluation gain in 1QFY21, net profit was 4.2% lower from RM1.34 billion, while operating income was down 2.7% from the RM4.80 billion achieved in the immediate preceding quarter.
“This was due to a 18.8% reduction in non-interest income (NOII) from weaker fees and trading income, despite net interest income (NII) increasing 3.4% q-o-q,” it added.
Its consumer banking division posted a drop in profit before tax (PBT) of 9.8% to RM555 million in the quarter under review, as compared to RM615 million in the immediate preceding quarter, due to stronger wealth management performance in 1QFY21.
As for its commercial banking division, it posted a higher PBT of RM306 million, versus the RM293 million in 1QFY21, driven by higher NII and lower operating expenses.
The group’s wholesale banking division’s PBT expanded 8.5% q-o-q on the back of lower provisions.
However, on a year-on-year basis, CIMB’s net profit jumped from RM277.08 million in 2QFY20, while revenue rose 20.9% from RM3.87 billion.
For the first half of the financial year (1HFY21), CIMB recorded a net profit of RM3.54 billion, a more than four-fold jump from the RM785 million reported in the same period last year, while revenue grew 32.7% to RM10.63 billion from RM8.01 billion.
Earnings per share surged to 35.56 sen from 7.91 sen.
“The improvement in performance was driven by higher operating income, strong cost containment and significantly lower provisions compared to the lower base results recorded in 1HFY20, which were affected due to the economic disruption of Covid-19,” the group said.
CIMB group chief executive officer (CEO) Datuk Abdul Rahman Ahmad in a separate statement said the group’s solid performance reflects the progress made in its Forward23+ strategic plan and momentum from economic recovery experienced earlier in 1QFY21.
“Despite some tapering of topline growth in 2Q21 due to the resurgence of the pandemic across the region, the Group benefitted from positive earnings recovery in 1H21, after taking into account the low base effect from a year ago, driven by improvement in NIM, continued cost focus and lower provisions across the Group,” he added.
In terms of prospects, Abdul Rahman noted that the group remains cautious due to the potential downside risks in the second half of the financial year, primarily due to the uncertainty surrounding the opening of regional economies and economic recovery due to the Covid-19 Delta variant.
“Our focused investments under our Forward23+ strategic plan are progressing well, particularly in the areas of cost rationalisation and wealth management.
“With more than 50% of banking transactions now being carried out online, we have strengthened our digital proposition and will continue to invest in technology to enhance our customer experience.
“CIMB Islamic remains a key focus, as we aim to strengthen its leading position through an Islamic first approach to developing products and solutions,” he added.
CIMB’s share price closed two sen or 0.41% lower at RM4.91 today, valuing the group at RM49.17 billion.