(Aug 30): CIMB Group Holdings Bhd (KL:CIMB), Malaysia’s second-largest bank by assets, said on Friday its net profit rose 11% in the second quarter from a year earlier due to higher net interest income and non-interest income.
Net profit for the three months ended June 30, 2024 (2QFY2024) was RM1.96 billion compared with RM1.77 billion over the same period a year earlier, CIMB said in an exchange filing. Net interest income rose 2% year-on-year to RM2.81 billion while non-interest income was 2% higher at RM1.56 billion.
“The group is confident of improved financial performance in 2024 compared with last year,” CIMB said.
CIMB has also proposed a cash dividend of 27 sen per share, comprising a special dividend of seven sen per share and an interim dividend of 20 sen per share.
“The performance was driven by robust operating income growth, disciplined cost controls and improvement in asset quality, contributed by the group’s diversified Asean portfolio, which serves all client segments. Our strong risk culture also proved to be key in facilitating the group to manage its risks in current volatile markets," said CIMB group chief executive officer Novan Amirudin in a statement.
The group's net profit for the first six months of FY2024 came in at RM3.9 billion, up 14% from RM3.42 billion in the first six months of FY2023, as operating income rose to RM11.23 billion from RM10.33 billion.
Net interest income climbed 6.7% to RM7.65 billion, underpinned by growths in net interest margin (NIM) and assets. Non-interest income (NOII) also improved, rising 13.2% to RM3.58 billion while NOII ratio strengthened to 31.9% from 30.6%, lifted by stronger fees, treasury client sales and trading.
"Price discipline and deposit-led strategies to address industry NIM compression in 2023 are starting to pay off, resulting in a second straight quarter of NIM expansion with seven basis points in 1H24. Loan growth continued its momentum, rising 4.2% year on year (y-o-y) from all markets and segments, while deposits grew by 2.7% y-o-y. CASA ratio recorded 40.9% as at June 2024, up from 38.5% as at June 2023," CIMB said.
Cost-to-income ratio improved 40 bps y-o-y to 45.6%, as the group kept operating expenses under control with a 7.9% y-o-y increase, mainly due to increased investments in technology, which rose 9.4% y-o-y.
Asset quality also improved, said CIMB, with total provisions dropping 8.9% y-o-y to RM802 million and allowance coverage climbing to 101.2%.
Its capital position remains "strong and above target", said the group, with its Common Equity Tier 1 at 14.5% as at end-June, and total capital ratio at 18.2%. The liquidity coverage ratio remains above the regulatory requirement of 100% for all banking entities within the group, CIMB added.
“We are optimistic for the remainder of the year," said Novan. "Our Forward23+ strategic plan will complete by the end of this year, and we are currently devising our next strategic plan, which we will announce alongside our FY24 results, taking into consideration our endowments, customer needs, trends and competitive landscape."
CIMB shares rose 20 sen or 2.5% to close at RM8.20 on Friday, giving the group a market capitalisation of RM87.77 billion. Year to date, the stock has climbed RM2.36 or 40.4%.