KUALA LUMPUR: CIMB Group Holdings Bhd’s net profit for the financial year ended Dec 31, 2017 (FY17) jumped 25.5% to RM4.47bil compared with RM3.56bil a year ago.

Its latest earnings is shy off its record of RM4.54bil achieved in FY13. The group’s pre-tax profit (PBT) was 25.1% higher at RM6.11bil, with loan provisions declining 7.4% year-on-year (y-o-y). The group’s revenue improved almost 10% to RM17.62bil against RM16.06bil in FY16. Its earnings per share stood at 49.6 sen with a net return on average equity of 9.6%

In the fourth quarter, CIMB’s net profit jumped 24.1% to RM1.06bil against RM854.38mil previously. Its revenue rose to RM4.51bil against RM4.31bil. 

The group declared a second interim net dividend of 12.00 sen per share to be paid via cash or an optional dividend reinvestment scheme. For FY17, the total dividend amounted to 25 sen or RM2.28bil, translating to a dividend payout ratio of 51.0% of FY17 profits.

In a statement, group CEO Tengku Datuk Zafrul Aziz said: “We are pleased to have met our key financial targets for 2017 and to report our highest ever PBT of RM6.11bil, an increase of 25.1% y-o-y, on the back of record operating income of RM17.63bil, continued cost discipline and lower provisions. 

“Both wholesale and consumer banking had a good year, posting PBT growth of 53.0% and 11.8% respectively. Our commercial banking performance was tempered by higher-than-expected provisions in Singapore and Thailand, although Malaysia performed well. CIMB Niaga’s PBT increased by 45.7% and CIMB Thai returned to profitability,” he said. 

For FY17, CIMB’s operating income grew 9.7% y-o-y to RM17.63bil largely driven by a 12.8% growth in non-interest income, in line with better capital market activity and improved fee income and an 8.4% growth in net interest income. 

Its operating expenses rose 5.6% y-o-y but was only 3.4% higher after excluding foreign currency translation effects as the group sustained its cost management efforts.
The positive JAW brought about the 14.6% improvement in the group’s pre-provisioning operating profit (PPOP).

The group’s regional consumer bank PBT was 11.8% higher y-o-y in FY17 at RM2.57bil, making up 42% of group PBT. Its regional wholesale banking PBT improved 53.0% y-o-y to RM2.57bil from a combination of increased capital market activity, loans growth and lower provisions.

CIMB said its non-Malaysia PBT contribution to the group rose to 31% in FY17 compared to 22% in FY16. Indonesia’s PBT expanded by 48.5% y-o-y to RM1.37bil in tandem with the improving financial performance at CIMB Niaga. Thailand’s PBT contribution of RM184mil increased by 1,214.3% y-o-y arising from lower provisions. Total PBT contribution from Singapore was 46.9% higher at RM354mil on the back of improved revenues.

The group’s total gross loans (excluding the bad bank) grew by 0.2% y-o-y , while total deposits grew 5.5% y-o-y. The group’s loan to deposit ratio (LDR) stood at 90.8% compared to 95.6% in FY16.

The group’s gross impairment ratio stood at 3.4% as at end-December 2017, with an allowance coverage of 70.5%. The group’s cost-to income ratio improved to 51.8% compared with 53.9% in FY16, in line with stronger revenues and sustained cost management. 

The group’s net interest margin (NIM) was unchanged at 2.63% in line with continued liability management.

As at Dec 31, 2017, CIMB Group’s total capital ratio stood at 16.5% while the Common Equity Tier 1 (CET1) capital ratio strengthened to 12.2%.

Going forward, Zafrul said the group was “optimistic about 2018 and confident of achieving our T18 targets”, on the back of continued momentum in Malaysia and the expectation of further improvement in loan growth and asset quality across Indonesia, Thailand and Singapore. 

“This year will also see us complete our presence in all 10 Asean countries with our first branch opening in the Philippines by end-2018. We are also excited to launch our digital banking proposition in Vietnam in 1H18. 

“We strongly believe that these, coupled with our strengthened foundation, strategic partnerships and extensive Asean network will help us deliver real value to all our stakeholders and further entrench CIMB’s position as a leading Asean universal bank,” Zafrul.