KUALA LUMPUR (Feb 28): CIMB Group Holdings Bhd has missed its loan growth target of 7% for the financial year ended Dec 31, 2017 (FY17), recording a growth of only 0.2%.

Group chief executive officer Tengku Zafrul Aziz said this was due to slower-than-expected loan growth from CIMB’s Singapore and Thailand operations.

“Malaysian loan growth was actually around 6.5% last year, while industry loan growth was only around 5%. So in Malaysia, we grew above the industry average,” he said at a media briefing on the group’s FY17 results.

CIMB Group, the second largest banking group in Malaysia, had registered a loan growth of 8.7% in FY16, helped by foreign-exchange gains from its Indonesia and Thailand operations.

Zafrul said the group had also missed its FY17 loan loss charge target of between 0.6% and 0.65%, when it managed only 0.69%. 

“There are two reasons, first is the higher than expected provisions in Singapore and Thailand. 

“Second being, like other banks, we were impacted by Singapore’s oil and gas sector. But having said that, our oil and gas exposure is less than 2.3% and also the (higher provisions for the) Thailand operation was mainly due to commodity (related-loans),” Zafrul explained.

Nevertheless, CIMB managed to record a return on equity (ROE) of 9.6%, exceeding the target of 9.5%.

The group’s common equity tier 1 (CET1) strengthened to 12.2%, meeting the target of at least 11.5%. Cost-to-income ratio (CIR) at 51.8% also met the target of below 53%.

In terms of dividend payout ratio, CIMB’s 51% in FY17 fell within its target range of 40% to 60%.

For FY18, Zafrul said CIMB is targeting a higher ROE of 10.5%, same dividend payout range, a loan growth of 6%, loan loss charge of between 0.55% and 0.6%, CET1 of 12%, and 50% CIR.

CIMB Group’s share price was trading at RM7.28 as at 4.20pm, down one sen or 0.14% from yesterday, for a market capitalisation of RM67.25 billion.