RETAIL BANKING | Staff Reporter, Malaysia

CIMB's net profit up 15.1% to US$1.3b in 2011

For 4Q11 alone, the Group’s net profit of US$374 million was 12% higher than 3Q11.

CIMB Group Holdings Berhad of Malaysia reported a record net profit of US$1.3 billion for 2011, up 15.1% year-on-year.

For 4Q11 alone, the Group’s net profit of US$374 million was 12% higher than 3Q11, and 29.8% above its 4Q10 net profit of US$288 million. The FY11 net return on equity was also a record high 16.4%, but below the Group’s full-year target of 17%.

The Group’s FY11 revenues stood at US$4 billion, up 2.1% year-on-year at. Net interest income grew by 3.0% while non-interest income rose just 0.3% higher year-on-year since last year’s non-interest revenues were boosted by several large items including the sale of ex-Lippo bonds.

The Group’s profit before tax was 12.4% higher at US$1.7 billion driven by lower credit losses and better cost management.

"We delivered record profits and ROE in a year when revenue growth was subdued due to the high 2010 non-interest income base, compressing interest margins and our more cautious approach to asset growth,” said said Dato’ Sri Nazir Razak, Group Chief Executive, CIMB Group.

“We managed costs well and drove down credit charges. I am, therefore, very pleased with our operating results and especially proud of the efforts and sacrifices made by most of our staff across the region this year. Our primary disappointment was our share price which significantly underperformed benchmarks.”

The Group’s Malaysian Consumer Bank PBT increased by 86.1% year-on-year to US$438 million. Consumer bank performance was also boosted by a 24% growth in retail deposits.

PT Bank CIMB Niaga, the Indonesian subsidiary, was the largest contributor to Group PBT at 29% compared to 34% in FY10. The Malaysian Consumer Bank’s contribution to Group PBT was significantly higher at 26% versus 15% in FY10.

Total non-Malaysian PBT dropped to 38% in FY11 from 48% in FY10 due to absence of the ex-Lippo Bank bond gains at CIMB Niaga.

The Group’s 4Q11 revenues of US$1.1 billion were 11.5% higher than 3Q11, translating to a 12.0% quarter-on-quarter net profit growth to US$374 million. Net interest income increased by 4.6% while non-interest income grew by 24.7%.

Razak believes 2012 could surprise on the upside as most of the downside risks are already quite visible.

“On our part, we believe recent changes to our business model and processes have made us more competitive in our regional wholesale business and our 2012 deal pipeline is very good. Despite the anticipated slower credit growth environment for retail loans in Malaysia, we believe we can build on the huge advances we made in consumer banking as a whole last year.

“We expect CIMB Niaga to continue its high growth rates in line with robust Indonesian markets and CIMB Thai’s transformation to pick up momentum following the commissioning of our new core banking system in March/April this year. We are overall cautiously optimistic and have set a ROE target of 16.4% for the year.”

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