CIMB lowers loan growth projection for 2016
The integrated banking group posted a higher pre-tax profit of RM1.18 billion in the second quarter ended June 30, 2016, from RM883.74 million in the same period last year.
Revenue for the quarter rose to RM3.9 billion from RM3.83 billion previously.
Group Chief Executive Tengku Datuk Seri Zafrul Aziz said the lower projection is due to the challenging operating environment across the region and given the continued volatility and uncertainty externally.
Speaking to reporters at the bank’s first-half financial year 2016 briefing here today, he said the bank had also revised its return on average equity (ROE) target to nine per cent from 10 per cent previously, in tandem with consensus projection.
“Our loan growth and ROE expectations will likely be below our original 2016 target.
“However, all other targets like capital, cost and dividend payout remain on track,” he added.
Tengku Zafrul said CIMB Group remained upbeat on the performance of its Indonesian subsidiary, CIMB Niaga, although the local operating environment there is expected to continue being challenging.
“CIMB Malaysia and CIMB Singapore’s performance is expected to be subdued in line with the slower economic environment in both countries,” he said.
He added that the performance of CIMB Thai, its Thai subsidiary, is also expected to be subdued as it continues to focus on asset quality and operational reorganisation.
Nevertheless, he said the bank is expecting a better overall performance in the second half of this year, driven by the Indonesian business and strict cost control.
He said the bank has closed 22 branches since August last year as part of initiatives to reduce operating expenditure, as well as promote digitalisation.
“We are leveraging on technology to improve customer experience in doing business with the bank,” he added.
Tengku Zafrul said another branch would be closed before year-end and all staff of affected branches were relocated to other branches to utilise manpower.
Meanwhile, CIMB Group’s pre-tax profit for the six-month period improved to RM2.31 billion from RM1.7 billion in the same period last year, while revenue increased to RM7.62 billion from RM7.51 billion.
Tengku Zafrul said the improvement in the first half was underpinned by a 241.2 per cent year-on-year improvement in Indonesia and sustained cost management initiatives.
He said consumer banking’s pre-tax profit increased by 35.8 per cent year-on-year due to regional loan growth coupled with lower overhead costs and provisions.
“First half loan growth was 6.6 per cent lower year-on-year driven by consumer banking, deposits grew 7.1 per cent due to a 7.8 per cent expansion in the current and saving accounts, with operating expenses 0.7 per cent lower and annualised ROE standing at 8.1 per cent,” he added.
He said the bank’s T18 projects, an initiative to improve risk management, asset quality and cost management, is showing encouraging results as reflected in the financial results.
On Islamic banking, Tengku Zafrul said CIMB Islamic, the Islamic banking arm of the group, saw pre-tax profit rise 43 per cent to RM368 million in the first half of this year from an improved performance in the consumer segments.
He said CIMB Islamic’s gross financing assets increased by 10.3 per cent year-on-year to RM42.7 billion, accounting for 14.3 per cent of the group’s total loans, while total deposits increased by 6.9 per cent year-on-year to 46.5 billion.
Going forward, he said the Islamic banking division is expected to continue recording strong growth in line with the bank’s effort to emphasise the promotion of Islamic products and services.
On the overnight policy rate, Tengku Zafrul said Bank Negara Malaysia is expected to undertake another rate cut before year-end.
He said the expectation is in consensus with other analysts and that of economists. — Bernama
Source : Malay Mail Online | All http://ift.tt/2bLiLqf
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