CIMB 1Q net profit up 17.7% to RM1.94bil

KUALA LUMPUR: CIMB Group Holdings Bhd remains cautious about the year due to global economic challenges, heightened geopolitical pressures, the possibility of extended high interest rates, and a competitive banking industry environment.

“However, we expect our key operating markets to be resilient and well-positioned to capture economic growth, especially from the positive impact of increased tourism economy.

“Barring unforeseen circumstances, the group is optimistic of being on track to deliver on its FY24 targets on the back of positive performance from Malaysia and Singapore,” group chief executive officer Datuk Abdul Rahman Ahmad said in a statement.

In the first quarter ended March 31 (1Q24), CIMB’s net profit rose 17.7% to RM1.96bil against RM1.64bil, translating into a higher earnings per share of 18.16 sen from 15.42 sen in the same quarter last year.

Revenue rose 12.6% to RM5.63bil compared with RM5bil achieved last year.

CIMB said the higher profit was driven by strong operating income growth and contained costs and provisions.

The positive performance translates to an improvement in the Group’s annualised return on average equity (ROE) to 11.4% compared to 10.3% recorded in 1Q23.

Its operating income in 1Q24 rose 12.6% year-on-year (YoY) to RM5.63bil, driven by both net interest income (NII) and non-interest income (NOII) growth.

NII grew by 7.7% YoY to RM3.79bil attributed to the robust loan growth and NIM recovery in the banking book, while NOII grew 24.5% YoY to RM1.84bil, supported by strong capital markets and investment-related income, as well as gains from the sale of non-performing loans.

Total gross loans increased by 7.0% to RM442.3bil YoY while total deposits grew by 8.2% YoY to RM505.9bil.

CIMB said deposits increased by 8.2% YoY, driven by the strong 16.8% CASA growth, which translates to an improved current account and savings account (CASA) ratio of 40.8% in Mar-24 vs 37.9% in Mar-23.

Its cost-to-income ratio (CIR) improved YoY to 45.3% attributed to the robust operating income expansion which offset the 8.9% YoY increase in 1Q24 operating expenses from inflationary pressures and technology investments.

Meanwhile, total provisions were contained at RM503mil with credit cost at 35 basis points (bps) as compared to 37bps recorded in 1Q23.

CIMB’s capital position remained strong and above target with its common equity tier 1 (CET1) ratio at 15.0% as at end Mar-24, up from 14.3% as at end Mar-23 and 14.5% as at end Dec-23.

“The strong performance seen in the first quarter reflects a positive start to the financial year amidst the challenging and uncertain global environment. Our positive revenue growth, contained cost and provisions contributed to the strong performance, especially from Malaysia and Singapore, underpinning the strength of our Asean diversification strategy,” Abdul Rahman said.

“Focused execution of initiatives under our Forward23+ strategic plan continues to bear positive results, with strong CASA growth and recovering NIM from our deposit-led strategy, which helped drive better NII performance. At the same time, NOII expansion remained robust and asset quality metrics continued to strengthen, reflecting the resilience of our business franchise,” he added.

Abdul Rahman stated that as the group pushes towards the completion of the Forward23+ strategic plan, they remain steadfast in their focus to achieve objectives. This includes continued emphasis on strengthening the deposit and CASA franchise, managing NIM, driving NOII expansion, and focusing on technology and operational resilience.