KUALA LUMPUR: CIMB Group Holdings Bhd posted a net profit of RM1.43bil in the first quarter to March 31 (1Q22), against RM2.46bil a year earlier.
The contraction was mainly due to the revaluation gain of RM1.16bil on the deconsolidation of TNG Digital in 1Q21 as well as the impact of Cukai Makmur in 1Q22.
On a quarter-on-quarter (QoQ) basis, CIMB recorded stronger performance with reported operating income increasing by 3.3% to RM4.74bil whilst reported net profit grew by 66.9% QoQ to RM1.43bil from RM855mil.
The banking group said this translates to a reported return on average equity (ROE) in 1Q22 of 9.6%, restoring the group back to pre-pandemic levels of performance.
CIMB’s revenue in 1Q22 stood at RM4.73bil, down 19.8% from RM5.9bil previously.
In a statement, CIMB said its net interest income (NII) grew by 3.8% year-on-year (YoY) to RM3.55bil, despite a marginally lower net interest margin (NIM) of 2.45% mainly due to the group’s Indonesia business.
Core non-interest income (NOII) declined by 10.9% YoY to RM1.19bil due to a weaker global investment environment.
CIMB’s total gross loans increased by 4.9% to RM384.7bil YoY while total deposits grew by 7% YoY to RM441.1bil.
Deposits rose 7.0% driven by strong current account savings account (CASA) growth of 9.9% YoY, translating to an improvement in CASA ratio from 42.3% recorded in March 2021 to 43.5% in March 2022.
The group’s capital position remains strong and above target with its common equity tier 1 (CET1) ratio at 14.5% as at March 2022, up from 12.9% as at March 2021.
CIMB’s cost-to-income ratio (CIR) improved to 47.0% compared to 51.6% in 4Q21 and 47.2% in 1Q21 as core operating expenses decreased by 0.8% YoY from continued stringent cost controls.
Total provisions also declined significantly by 43.9% YoY from RM756mil recorded in 1Q21 to RM424mil in 1Q22.
The bank said this was due to improved asset quality on the back of positive migration of customers from repayment assistance programmes, as well as writebacks from the recovery of legacy credits
Group chief executive officer Datuk Abdul Rahman Ahmad said the strong performance seen in the first quarter is a positive reflection of the economic recovery across its markets, as well as the growing momentum in all segments of our business.
He said steady topline growth, sustained cost controls and reduction in provisions contributed to improved profitability. This was achieved despite the challenging investment environment as the world adjusts to geopolitical developments which have created macroeconomic headwinds and financial market volatility.
“Our capital and liquidity positions, as well as asset quality, continue to strengthen, demonstrating the strength and resilience of our business franchise amidst the current operating environment. We are particularly encouraged to see the positive traction in loan growth as the strategy to reshape our portfolio is starting to bear results.
“At the same time, ongoing cost optimisation efforts have contributed to lower operating expenses and improvement in CIR, notwithstanding higher expenses related to technology and operational investments.
“We expect to spend RM1bil in FY22 to drive further digitalisation as well as improve technology and operational resiliency,” Abdul Rahman said.
“We remain optimistic for the remainder of 2022 given the anticipated recovery of regional economies as well as expansion in domestic demand. However, we also remain cautious on the heightened risk of slower economic growth arising from the impact of inflationary pressures and geopolitical uncertainties.
“We will continue to stay on course with our Forward23+ strategic plan to strengthen our position to be the leading focused Asean bank, as we build on the positive momentum of asset growth, contained cost escalation and improved asset quality to deliver sustainable financial returns,” he added.