CIMB’s net profit grows 9.3% to RM1.8b in 1H 2011

For 2Q11, the Group’s net profit of RM970m was 5.8% higher than 1Q11.

CIMB Group Holdings Berhad reported a record half year net profit of RM1.887 billion for 1HFY11, representing a 9.3% year-on-year growth and equivalent to net earnings per share of 25.4 sen. The annualised 1H11 net return on equity was 15.8%. The Group declared an interim net dividend of 12 sen per share amounting to a net payment of RM892 million, translating to a dividend payout ratio of 47% of 1HFY11 net profits.

For 2Q11, the Group’s net profit of RM970 million was 5.8% higher than 1Q11. On a Y- o-Y basis, this represented a 9.1% growth over the 2Q10 net profit of RM889 million.

“We had another quarter of record profits in 2Q11, underpinned by a strong uplift from our Malaysian consumer banking operations and continued high growth at CIMB Niaga. We are however still behind our ROE and balance sheet growth targets for the year as we have been treading more cautiously given the uncertain global environment,” said Dato’ Sri Nazir Razak, Group Chief Executive, CIMB Group.

2) CIMB Group Y-o-Y Results

CIMB Group’s 1H11 revenues decreased by 1.5% Y-o-Y to RM5.71 billion due to lower non-interest income as last year’s revenues were boosted by sales of ex-Lippo Bank bonds (excluding this, revenues would have increased 3.5%). The Group’s profit before tax was 8.5% higher at RM2.51 billion as credit losses remained subdued.

For 1H11, the Group’s Malaysian consumer bank PBT increased by 83.3% Y-o-Y to RM715 million as the 11.9% improvement in revenue was enhanced by low credit charges. PBT at Corporate & Investment Banking rose 1.2% Y-o-Y to RM493 million, while Treasury & Investments declined 15.7% Y-o-Y to RM461 million.

CIMB Niaga’s PBT rose 39.6% to IDR2,123 billion but its contribution to the Group was 11.1% lower Y-o-Y at RM736 million due to the absence of gains arising from the sale of ex-Lippo Bank bonds which occurred in 1H10. CIMB Thai’s PBT contribution, after GAAP and FRS139 adjustments, surged to RM49 million from RM26 million in 1H10. Asset Management and Insurance PBT rose 57.9% Y-o-Y to RM57 million due to the non-recurrence of provisions for doubtful debts made at CIMB Aviva in 1H10.

CIMB Niaga was the largest contributor to Group PBT at 29% compared to 36% in 1H10. The Malaysian Consumer Bank’s contribution to Group PBT was significantly higher at 28% versus 17% in 1H11. Treasury and Investments contributed 19%, CIB 20% Group Asset Management and Insurance 2%, while CIMB Thai’s contribution was 2%.

Total non-Malaysian PBT declined to 37% in 1H11 from 44% in 1H10 due to absence of the ex-Lippo Bank bond gains at CIMB Niaga. The Group’s total gross loans expanded 11.0% Y-o-Y, underpinned by the strong 25.9% growth at CIMB Niaga as well as the 13.7% increase in Malaysian consumer loans. Mortgages, credit cards and the Group’s micro credit lending grew by 17.3%, 19.1% and 72.0% respectively Y-o-Y. Hire purchase loans grew at a modest 4.6% Y-o-Y but commercial banking loans declined 1.0% Y-o-Y. Corporate loans contracted 5.3% Y-o-Y. The Group's overall net interest margins eased to 3.11% from 3.38% last year.

Total Group deposits grew by 8.8% Y-o-Y underpinned by a 26.7% expansion in CIMB Bank’s retail deposits. CIMB Niaga’s focus on deposit accumulation resulted in a 14.6% Y-o-Y growth. CIMB Thai’s deposits however, grew by only 2.0%.

The total loan impairment for the Group declined by 66.2% Y-o-Y at RM92 million in 1H11 versus RM272 million in 1H10. This brought about a lower Group total annualised credit charge of 0.10% compared to the 0.40% full year target. The Group’s gross impairment ratio continued to improve to 5.7% for 1H11 from 5.9% as at end-1Q11 and 7.2% as at 1H10, with an impairment allowance coverage of 80.4%. The Group’s cost to income ratio rose to 56.2% compared to 53.8% in 1H10.

CIMB Bank’s risk weighted capital ratio stood at 14.6% while its core capital ratio stood at 13.9% as at 30 June 2011 (after inclusion of 1H11 net profits and after the proposed dividends). CIMB Group’s double leverage and gearing stood at 120.0% and 22.4% respectively as at end-June 2011.

3) CIMB Group Q-on-Q Results

The Group’s 2Q11 revenues of RM2.96 billion were 7.6% higher than 1Q11, translating to a 5.8% Q-o-Q net profit growth to RM970 million.

The Group’s Malaysian Consumer Banking division PBT jumped 8.5% Q-o-Q mainly driven by the consumer “good bank” as recoveries from GSAM were lower in the current period. CIB was 3.1% higher from better advisory activities in 2Q11 but Treasury and Investments was 17.8% lower. CIMB Niaga’s PBT contribution expanded 19.0% Q-o-Q to RM400 million. GAM and Insurance PBT surged 65.0% to RM36 million. CIMB Thai’s PBT contribution was 67.6% lower at RM12 million compared to a RM37 million profit in 1Q11.