KUALA LUMPUR: CIMB Group Holdings Bhd, which saw a record net profit of RM5.58 billion for the financial year ending Dec 31, 2018 (FY18), expects a stronger performance in FY19 but remains cautious in view of sustained external headwinds. It is closely watching elections and political developments in Indonesia and Thailand.
Group CEO Tengku Datuk Seri Zafrul Aziz hopes for a better FY19, based on its forecast loan growth and given that markets are expected to be better. Despite some uncertainties in the region, Asean’s growth rate is expected to remain robust.
“Malaysia looks strong … costs continue to be in control and provisions, assets qualities numbers are quite good. We don’t see any problems. (For) Malaysia we’re positive, but we’ve got Thailand and Indonesia with elections. We don’t know what happens after their elections. Indonesia can slow down, Thailand also … so my concern is now more of outside Malaysia. We have 60% (of business from) Malaysia, 40% is still outside Malaysia,” he said after announcing the group’s FY18 results here today.
Zafrul said CIMB is aiming for loan growth of 6-7% for FY19, above the industry’s 5%, taking into account the growth in its other markets. It posted loan growth of 7% in FY18, supported by 10.5% growth in Malaysia.
The group’s gross impairment ratio stood at 2.9% as at end-December 2018, with an allowance coverage of 106.3%
Zafrul said net interest margin (NIM) will be relatively flat this year. The group’s NIM was lower at 2.5% in FY18, attributed to the contraction at CIMB Niaga. Return on equity (ROE) is also expected to be flat as the group is planning to make investments into technology this year.
CIMB’s net profit for the fourth quarter ended Dec 31, 2018 rose 5.4% to RM1.12 billion from RM1.06 billion a year ago, largely attributed to commercial banking and group funding, while revenue dipped 9.8% to RM4.07 billion compared with RM4.52 billion in the previous year’s corresponding quarter.
Its FY18 net profit was 24.8% higher at RM5.58 billion from RM4.48 billion in FY17, underpinned by strong performances from consumer and commercial banking, as well as lower provisions and costs. However, revenue was 1.4% lower at RM17.38 billion compared with RM17.63 billion in FY17.
The group declared a second interim net dividend of 12 sen per share, with the total dividend amounting to 25 sen. This translates to a dividend payout ratio of 50.8% of FY18 business-as-usual profits.
CIMB achieved its T18 financial targets scorecard, with its cost-to-income ratio coming in at 49.8%, common equity tier 1 at 12.6% and ROE at 11.4% in 2018. Income contribution from consumer and commercial now stands at 61% and it has a presence in the 10 Asean countries. Initiatives throughout T18 resulted in savings and cost avoidance of over RM2 billion from 2015 to 2018.
The group is expected to unveil its Forward23 five-year strategic plan in the next two weeks.
Source: The Sun Daily