CIMB registers FY20 net profit of RM1.19 billion

By ANIS FARHANAH MALEK
anisfarhanah@dagangnews.com

KUALA LUMPUR 26 Feb. - CIMB Group Holdings Berhad (CIMB) registers a profit before tax (PBT) of RM1.53 billion and a net profit of RM1.19 billion for the financial year ended 31 December 2020 (FY20). 

Despite the year-on-year (YoY) decline in PBT and net profit, the group’s underlying business proved resilient, CIMB said. 

It stated, FY20 pre-provisioning operating profit (PPOP) declined only marginally by 1% to RM8.21 billion, while operating income remained stable with a slight decrease of 3.4% to RM17.19 billion. 

“Aggressive cost reduction targets were also exceeded with a 5.5% or RM524 million decrease in operating expenses leading to an improved cost-to-income ratio (CIR) of 52.2%, down 1.2% YoY.

“Topline resilience, cost discipline and proactive measures to protect asset quality enabled the group to strengthen its financial position and ensure it remains well-capitalised against shocks, leading to its highest CET1 ratio of 13.3%. 

“CASA also grew strongly by 22.6% in FY20, bringing the CASA ratio to 41.3% as at December 2020 from 34.4% in the previous year,” said CIMB in a statement.

Meantime, the group’s FY20 performance translated to an annualised return on average equity (ROE) of 2.1% and earnings per share (EPS) of 12.0 sen. 

Hence, it declared a proposed annual dividend of 4.81 sen per share, amounting to a total payout of RM477 million and a payout ratio of 40% in line with its dividend policy. 

CIMB saw FY20 performance was largely impacted by the COVID-19 pandemic, resulting in elevated loan provisions arising from accounting adjustments incorporating macroeconomic factors and management overlays, as well as specific provisions made against COVID-19 related and legacy accounts.

 Against the backdrop, net-interest income (NII) grew marginally to RM12.73 billion YoY despite a 14 bps decrease in net interest margin (NIM) to 2.32% in FY20 due to the impact of lower interest rates and modification loss, it added. 

CIMB said, as for non-interest income (NOII), stronger treasury and markets, wealth management, and investment banking activity in the second half of the year partially offset weakness in the first half, resulting in NOII of RM4.46 billion. 

For the fourth quarter ended 31 December 2020 (4Q20), the group reported sequential operating income growth of 5.6% quarter-on-quarter (QoQ) to RM4.72 billion compared to the third quarter ended 30 September 2020 (3Q20). 

This was underpinned by a 3.8% increase in NII and 10.3% NOII growth, it further explained. 

Group Chief Executive Officer of CIMB Group, Datuk Abdul Rahman Ahmad said, 2020 was defined by the acute disruption of COVID-19 on public health and the global economy, impacting individuals, businesses and governments alike. 

“Pandemic-driven lockdowns and movement controls led to economic weakness and sharp gross domestic product (GDP) contractions across our core markets, resulting in revenue and profitability pressure across our business. 

“The challenging operating environment required us to take a hard look at all areas of our business and recalibrate our strategy, leading to the introduction of our Forward23+ mid-term strategy in early 4Q20. 

“As part of our plan to mitigate the challenging environment and strengthen our balance sheet, our most immediate priority was cost management, and in this regard we successfully surpassed our FY20 cost reduction target of 5% through rigorous cost optimisation measures,” said him in the same statement. 

The same period saw CIMB’s gross loans registered a slight decline of 1.0% YoY as the group took steps to de-risk its balance sheet and strengthen its financial position. 

“Enhanced risk management, prudent cost optimisation and targeted investments across the business will remain priorities as we seek to drive efficient growth. With expected lower provisions, we anticipate considerably better financial performance in FY21.

“Moving forward, FY21 will be the first full year of our Forward23+ strategy. We have also begun reshaping our portfolio to ensure we are well-positioned to accelerate growth in key segments. 

“In this context, digital is a main priority as online banking has become the primary banking experience for most customers, and we will continue to enhance our digital platforms to improve customer experience. 

“The Group is aware that borrowers continue to be impacted by the ongoing pandemic, and we will continue to provide support to affected borrowers,” Abdul Rahman further said. - DagangNews.com