CIMB Group core profits more than tripled in 9M 2021

But it reported weaker quarterly performance, largely due to its $309.8m Q3 expense.

CIMB Group’s core profits in the first nine months (9M) of the year more than tripled compared to the same period in 2020 on the back of higher operating income, significantly lower provisions, and improved performance across all segments and markets.

The bank’s core profits before tax totalled over $1.24b (RM9.26b), 285.7% higher or more than triple compared to 9M 2020, latest financial results showed.

Core net profit nearly quadrupled to $908m (RM3.84b) over the same period. This translates to an annualised 9M 2021 core return on average equity of 9%.

The bank’s earnings per share for the period is 34.5 cents. 
 
9M21 core operating income grew to about $3.77b (RM13.77b), up 11.7% from 9M 2020. Of this, net interest income grew by 12.9% to $2.46b (RM10.42b), largely driven by improved net interest margins in Malaysia and Indonesia. 

CIMB Group’s core non-interest income also rose by 8.2% year-on-year to $792.3m (RM3.35b), which the bank attributed to stronger treasury and markets and wealth management income despite slower momentum in the third quarter.
 
Costs remained “tightly managed,” according to CIMB, with the group’s core cost-to-income ratio (CIR) improving to 47.7%, below the target CIR of 50% and significantly lower than 9M 2020 CIR of 52.7%. 
 
However, CIMB said that it experienced weaker quarterly performance in the third quarter (Q3) compared to the previous quarter, due to the impact of restricted activity caused by the Movement Control Order and modification loss incurred on the repayment assistance programme under the PEMULIH assistance package.
 
For Q3, CIMB’s core operating income came at over $1.03b (RM4.39b) and core profits before tax at $387.8b (RM1.64b). 

Notably, CIMB logged an exceptional expense amounting to over $309.8m (RM1.31b) for Q3 2021. Over $288.5m (RM1.22b) of this goes to the non-cash accounting impairment of goodwill related to the group’s Thailand business of $288.5m (RM1.22b).

A further $19m (RM83m) is for intangible assets write-off and accelerated amortisation. 

These exceptional expenses are non-recurring and reportedly bears no impact to CIMB Group’s liquidity and capital position, the bank said. 

Digitalisation, moratoriums in focus
CIMB Group CEO Dato’ Abdul Rahman expects to see greater momentum as economic activities resume regionally. 

He noted that the bank will move to strengthen its digital capabilities over the following year, to be spearheaded by the planned rollout of their Next Gen mobile banking app in the first half of FY2022.

“We are also currently in the process of streamlining and enhancing our offerings for Preferred and Private Banking customers to provide a holistic wealth management proposition, including in the Islamic wealth segment,” the CEO said.

He shared that CIMB’s earlier investments under their Forward23+ strategic plan are “tracking well”, particularly in reshaping their portfolio and their structural cost initiatives.

“At the same time, we continue to be cautious as a sizable portion of our portfolio remains under repayment assistance with the PEMULIH programme. Accordingly, we expect FY21 provision levels to remain elevated as we continue to make provision overlays to maintain asset quality,” he said.

He added that the bank will remain focused on assisting vulnerable borrowers, in particular through the Financial Management and Resilience Programme (URUS), a banking industry initiative in collaboration with Agensi Kaunseling dan Pengurusan Kredit (AKPK). 
 
As of November 2021, CIMB said that it has processed around 520,000 financial payment relief assistance applications for individual, SME and business banking borrowers, amounting to about $21.72b (RM92b) in total gross loan value.