CIMB sees H1 net profit drop to $189m

Elevated loan provisions triggered the fall.

Malaysia's CIMB Group Holdings Berhad has posted a $189m (MYR785m) H1 net profit as its annualised return on equity (ROE) dropped 2.8% due to higher loan provisions, according to an announcement.

On a quarterly basis, the bank recorded a $66.7m (MYR277m) net profit, down from $122m (MYR508m) in Q2 2019.

Half-year operating income slipped 7.3% to $1.93b (MYR8.01b) from $2.08b (MYR8.63b) YoY due to a 27.6% plunge in non-interest income to $448m (MYR1.86b), driven by lower fee and trading income in line with a feeble economy.

On the other hand, net interest income rose 1.4% YoY to $1.48b (MYR6.15b), displaying solid momentum despite modification loss for the period. The underlying business remains strong with positive growth in gross loans and deposits, and current account savings account (CASA), and capital position is still resilient with a Common Equity Tier ratio at 12.9%.

The group’s total gross loans grew 3.9% YoY for H1 led by the consumer and wholesale banking segments, with Malaysia gross loans growing4.8%. Commercial banking loans shrank slightly on a yearly basis in line with softer economic activity, and as the group took a more prudent stance in this segment in Indonesia and Thailand.

Total deposits grew 7.8% YoY, driven by a 20.2% YoY growth in CASA, as CIMB placed greater emphasis on lower-cost deposits across all segments and operating countries, it said.. This resulted in a continued improvement in the CASA ratio to 38.4% as of June compared to 34.4% last year.

Loan-to-deposit (LDR) ratio stood at 88.2%. Half-year net interest margin lowered 2.29% owing to the impact of interest rate cuts across the region as well as the one-off modification loss arising from fixed rate loans taken in Q2. Excluding the modification loss, the group’s H1 NIM was only 7bps lower at 2.39%.