CIMB Group profits rose 4.1% to $283.8m in Q3

Non-interest income surged 19.9%.

CIMB Group’s profits grew 4.1% YoY to $283.8m (MYR1.18b) in Q3 but fell below expectations as a lumpy bond impairment of $22.25m (RM92.5m) dragged earnings, according to UOB Kay Hian (UOBKH). On a QoQ basis, the banking group’s profits rose 11.9% whilst 9M18 net profit increased 1.6%.

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CIMB Group booked a revenue recovery of 5.4% and pre-provision operating profit growth of 7.8% in Q3 amidst a stellar 19.9% rise in non-interest income. Loan growth also increased to 6.7% in 9M18 from 5.2% in 1H18.

"NIM also showed signs of stabilisation, inching up 1bp qoq vs -9bp qoq compression in 2Q18. As such, group ROE trended up from 8.8% in 2Q18 to 9.6% in 3Q18, bringing 9M18 ROE to 9.5% vs our full year estimate of 9.8%," analyst Keith Wee Teck Keong said in a report. 

Gross impaired loans (GIL) ratio also improved to 3.10% in Q3 from 3.17% in Q2. 

“The latest dovish statement on interest rate outlook form the Federal Reserve in the US should be positive for CIMB Niaga as it would imply a corresponding slower rate hike cycle in Indonesia to defend the rupiah,” added Keong. "This should help aid to stabilise CIMB Niaga’s NIM and hence CIMB’s, whose ytd 8bp decline in NIM was largely driven by CIMB Niaga’s NIM compression of more than 20bp. As such, we have pencilled in a milder group NIM compression of 5bp in 2019 vs an expected -10bp in 2018."