KUALA LUMPUR (Aug 30): CIMB Group Holdings Bhd’s net profit rose 38.45% to RM1.77 billion for the second quarter ended June 30, 2023 (2QFY2023), from RM1.28 billion a year earlier.
In a bourse filing, the bank said the positive performance was driven by strong operating income growth, stringent cost controls and lower provisions as the group benefits from its diversified Asean portfolio, with strong business growth recorded in Indonesia and Singapore.
Earnings per share grew to 16.63 sen in 2QFY2023, from 12.3 sen previously.
Quarterly revenue increased by 9.2% to RM5.33 billion, from RM4.88 billion.
It declared a first interim dividend of 17.50 sen per share, 35% higher than the 13 sen paid a year ago.
For the first half of FY2023 (1HFY2023), its net profit rose 26.23% to RM3.42 billion, from RM2.7 billion. Cumulative revenue was up 7.38% to RM10.33 billion, from RM9.62 billion.
This translates to earnings per share of 32 sen and annualised 1HFY2023 return on average equity (ROE) of 10.6%, which significantly improved compared to 9.1% in 1HFY2022.
1HFY2023 operating income was up by 7.4% year-on-year (y-o-y) to RM10.33 billion. Out of this, non-interest income (NOII) recorded a strong growth with a 32% increase y-o-y to RM3.16 billion, contributed by stronger markets-related and other income.
However, net interest income (NII) contracted marginally y-o-y to RM7.17 billion, due to net interest margin (NIM) compression caused by higher cost of deposits, but this was partially offset by positive loan growth momentum.
Total gross loans and deposit growth continued on an upward trajectory across key markets and business segments, with gross loans recording an 8.3% y-o-y increase while deposit growth was up 9.5% y-o-y.
Meanwhile, total current accounts savings accounts (CASA) contracted marginally y-o-y, but improved 5.7% quarter-on-quarter, driven by regional initiatives that are starting to bear fruit. This led to a sustained CASA ratio of 38.5% as at end June 2023.
The group’s cost-to-income ratio improved 50 basis points (bps) y-o-y to a record low of 46%, with operating expenses remaining under control, rising 6.2% y-o-y mainly due to an uptick from underlying operational cost.
Accordingly, the group’s pre-provisioning operating profit strengthened to RM5.58 billion, up 8.4% from positive Jaws. Total provisions remained contained with a 2.9% decline y-o-y to RM880 million.
The Jaws ratio is used to compare growth rates between income and expenses, and if a company’s income outgrows expenses, it is said to be undergoing positive Jaws.
The group’s capital position remains strong and above target with its common equity tier 1 (CET1) ratio at 14.2% as at June 2023.
Commenting on the group’s performance, CIMB group chief executive officer Datuk Abdul Rahman Ahmad said the group’s positive performance in 1H2023 was achieved on the back of strong NOII and loan growth as well as contained cost and provisions.
With the group’s strong capital, funding and liquidity positions, the group increased its interim dividend to 17.50 sen per share, representing a payout ratio of 55%, an increase from 50% in 1HFY2022.
“It is encouraging to see our diversified Asean portfolio showing positive results, with growth driven from the reshaped Indonesia and Singapore operations cushioning the group from downside risks in weaker markets.
“We are particularly pleased with CIMB Niaga’s transformation, which achieved a record high ROE of 15.4% for 1HFY2023. This achievement validates the group’s Forward23+ strategic plan to reshape our portfolio as we leverage the strengths of our core segments and markets. Our priority continues to be on executing this strategic plan, especially in strengthening our CASA franchise and deposits to help moderate the competitive deposit environment,” he added.
At Wednesday's closing bell, CIMB’s shares were unchanged at RM5.63, for a market capitalisation of RM60.05 billion. The stock has rebounded 17% from this year's low of RM4.81.