Friday August 27, 2010
CIMB Group Q2 profit up 34% to RM890mil
By TEE LIN SAY
Indonesian unit strongest contributor to its best quarter and half-year results
KUALA LUMPUR: CIMB Group Holdings Bhd posted its best three- and six-month performance when it announced its second quarter results to June 30 on the back of a strong rebound in corporate and investment banking, a surge in contribution from PT Bank CIMB Niaga and drop in loan loss provisions.
CIMB reported a 34.1% increase in net profit of RM889mil for the second quarter compared with the previous corresponding period. Revenue was up 16.59% to RM3.02bil. These results are in line with analysts’ expectations.
For its first half year, net profit grew 35.2% to RM1.73bil while revenue gained 14.9% to RM5.86bil.
With the Asian economies growing strongly and given CIMB’s first half momentum, group chief executive Datuk Seri Nazir Razak said CIMB was now increasing its return on equity target to 16.5% for 2010, from 16% before.
“The momentum is strong and our deal pipeline is very good. Our asset growth this year has also been strong and this sets the base for income into the future. We are optimistic that we will be able to achieve 16.5%,” said Nazir.
“CIMB’s margins are still strong despite competition. This is a good sign. This is also because its low-cost deposits composition has increased,” said a banking analyst.
Nazir said for the quarter under review, CIMB Bank registered a record number of new customers at 295,000.
CIMB also declared an interim dividend of 4.625 sen (single tier), amounting to a net payment of RM339mil.
In another development, CIMB has decided not to proceed with the divestment of a controlling stake in Southeast Asia Special Asset Management Bhd (Seasam) following the introduction of the Basel II framework.
Seasam is CIMB’s wholly-owned entity dedicated to the management of legacy non-performing loans.
“Under the new framework, lower loss value is estimated for Seasam’s portfolio compared with the provision estimated under FRS 139, therefore making the sale of Seasam economically unnatractive,” said Nazir,
Meanwhile for the first half, CIMB’s Indonesian subsidiary CIMB Niaga’s contribution surged 171.1% year-on-year to RM828mil from RM305mil previously on continued operational improvements and favourable operating conditions.
CIMB Niaga was again the largest contributor to the group pre-tax profit with 36% versus 18% in the previous corresponding period.
CIMB Thai made a RM26mil pre-tax profit contribution in the first half compared with RM29mil loss a year earlier.
Asset management and insurance pre-tax profit was 55.4% lower at RM36mil largely due to the non recurrence of gains on change in accounting standards at CIMB Aviva last year.
On the loans front, the group’s total gross loans expanded 16.1% year-on-year, underpinned by the 30.7% expansion of CIMB Niaga’s gross loans as well as the 15.2% growth in Malaysian consumer loans. Hire purchase loans grew 5.7% while business banking loans fell by 4.5%. Corporate loans improved 8.7% while the group’s net interest margins also continued to improve.
Mortgages, credit cards and the group’s micro credit lending grew by 22.9%, 38.3% and 38.7% respectively year-on-year in the first six months.
“Our Malaysian consumer banking currently stands at RM76bil, of which mortgages make up RM32bil. The mortgage market has done very well and we expect this performance to slow down in the second half. The rate of growth in the mortgage market is ripe for a bit of cooling down,” said Nazir.
Year-to-date, CIMB has achieved a 5% growth in loans. It has a full year annualised target of 12%.
CIMB’s total group deposits grew by 18.1%, driven by a 20.5% surge in CIMB Bank’s retail current account balances as the group’s new Singapore retail franchise continued its excellent start.
Meanwhile, CIMB Islamic’s first half pre-tax profit surged 144.6% to RM159mil as syariah-compliant banking products continued to gain ground. Its gross financing assets rose 141.4%, accounting for 14.3% of total group loans. Total deposits grew by 71.9% to RM20.3bil.