CIMB's recorded a lower net profit of RM785 million in 1H20

By Johardy Ibrahim
editor@dagangnews.com

SHAH ALAM 28 August - CIMB Group Holdings Berhad recorded a lower profit before tax (PBT) RM910 million and net profit of RM785 million for the first half period ended 30 June 2020 (1H20), down from RM3.56 billion and RM2.70 billion recorded respectively in the corresponding period last year. 

This translates to a lower annualised return on average equity (ROE) of 2.8% and net earnings per share (EPS) of 7.9 sen. The Group’s performance was affected by the challenging economic environment caused by the COVID-19 pandemic, which led to modification loss arising from the moratorium given to borrowers, as well as elevated provisions due to macro-economic factors (MEF) and specific credit provisioning.

On a quarter-on-quarter (QoQ) basis, the Group posted a PBT of RM196 million and net profit of RM277 million for the second quarter ended 30 June 2020 (2Q20), down from RM714 million and RM508 million recorded respectively in the previous quarter.

The Group’s underlying business however, remains resilient with positive growth in gross loans and deposits and significant CASA growth. CIMB also outlined its intention to undertake rigorous cost optimisation measures and proactively strengthen its balance sheet in order to mitigate the impact of the challenging economic environment. The Group’s capital position remains strong with its Common Equity Tier 1 (CET1) ratio at 12.9%1 , backed by healthy liquidity support.

Datuk Abdul Rahman Ahmad, Group Chief Executive Officer of CIMB Group said, “The subdued performance in 2Q20 came within expectations and was largely attributed to the impact of COVID-19.

"Moving ahead, we expect continued weaker performance for the remainder of 2020 in line with uncertain economic conditions, as we recognise elevated provisions arising from the impact of MEF under MFRS9 and take impairments on specific accounts outside Malaysia to strengthen our financial position.

"Our underlying business remains resilient, and we are pleased to see that loans and deposits grew 3.9% and 7.8% respectively, driving NII to grow by 6% YoY, excluding modification loss impact.”
 

“To mitigate the impact of the challenging economic environment, we aim to aggressively rationalise cost. We are pleased that cost on an absolute basis has already declined by 3.3% for 1H20, and we target an absolute cost reduction of around RM500 million or 5% for full year 2020.

The Group continues to be well-capitalised to withstand shocks through our prudent approach with a strong CET1 ratio and liquidity coverage ratio (LCR) remaining comfortably above 100%”, Abdul Rahman added.

“The short term economic outlook will remain challenging. In recognition of the new challenges posed by a fluid and uncertain economic landscape, we are recalibrating our mid-term Forward23 plan to ensure the Group is well positioned to take advantage of economic recovery. We will share the updated Strategic Plan in due course.”

“In the meantime, the Group will continue to be prudent and maintain the utmost discipline in managing both risk and asset quality. Our priority remains on supporting customers affected by the pandemic, especially in Malaysia, as we approach the end of the blanket moratorium in September. We are committed to continue providing extended relief and support to affected customers with CIMB’s Targeted Assistance Programme. These customised relief options are aimed at providing temporary breathing space to help our customers get back on their feet again.”

As at end-June, CIMB Group’s COVID-19 financial assistance initiatives have benefitted over 1.25 million retail customers and around 16,000 SMEs and corporate clients in terms of cash flow alleviation. The Group’s support for affected customers in Malaysia will continue post-moratorium via its Targeted Assistance Programme (TAP), in line with the Government’s extended COVID19 relief initiatives.

For the TAP, the Group has proactively reached out to a 330,000 retail customers in Malaysia to offer support, and 12.7% or 42,000 customers have responded. Out of the 42,000 customers who have responded, 17% have declined the offer, with the assumption that they will be able to resume payments once the moratorium ends, while the remainder are all approved under the TAP. 

For non-retail customers, the Group has engaged with over 11,000 of our business customers covering SME, commercial and corporates in Malaysia, and will provide assistance where necessary. Customers are reminded to contact the bank as soon as possible if they need further assistance with their loan/financing obligations.

“We remain committed to supporting the financial well-being and business-viability of all our customers, from individuals to SMEs and corporate clients. We are also committed in supporting the Government’s initiatives to continue help affected borrowers weather this period, which we believe will benefit the communities in which we operate and ultimately overall economic recovery,” Abdul Rahman concluded. - DagangNews.com