CIMB first-half net profit jumps 44% on gains from stake sales

CIMB first-half net profit jumps 44% on gains from stake sales

CIMB Bank
Workers clean signage of CIMB bank in Kuala Lumpur on May 8, 2015. (Photo: AFP/ Mohd Rasfan) 

KUALA LUMPUR: CIMB Group Holdings said on Wednesday (Aug 29) that its net profit for the first half of the year rose44 per cent to RM3.29 billion (US$801 million) from the same period last year, and that it was optimistic about the bank's performance for the rest of the year.

Net profit for second quarter alone was RM1.98 billion, compared with RM1.1 billion a year earlier, the bank said.

"It's only been the first two months into the second half, but judging from the pipeline that we have, we should see at least the same if not better performance in the second half," group CEO Zafrul Aziz told reporters on Wednesday after announcing the first-half results.

The higher profit was bolstered by a gain from the sale of 20 per cent of CIMB-Principal Asset Management and 10 per cent of CIMB-Principal Islamic Asset Management amounting to RM928 million.

ON TRACK TO ACHIEVE LOAN GROWTH TARGET

Zafrul said the group was quite optimistic and on track to achieve its loan growth target of 6 per cent this year, despite only registering a 3.4 per cent growth for the period under review, which was dragged down by subsidiary CIMB Niaga and the weakening of the Indonesian rupiah.

However, Zafrul said he believed the worst was over for the Indonesian operation, driven by the macro and regional economic conditions and a business re-calibration that was progressing well.

By segment, Zafrul said consumer and commercial banking had performed well during the first half, but wholesale banking was dragged by the capital market, particularly the equity and bond markets, but would perform better moving forward.

As for consumer banking, he said that the group saw a steady loan growth of 4 per cent year year-on-year, mainly attributable to mortgages loan which grew by 10 per cent and partly driven by the tax holiday period (June to August).

Despite the reimplementation of the Sales and Service Tax on Sept 1, Zafrul said he expected the impact on consumer banking to be minimal and that growth in this segment would sustain this year.

GROWTH PROSPECTS

Zafrul also anticipated a strong set of numbers for the second half for all countries that CIMB operates in, including Malaysia, Singapore, Thailand and Indonesia.

"CIMB Malaysia is expected to track the domestic economy and investment climate. CIMB Singapore's prospects will be driven by regional economic conditions, while CIMB Thai and CIMB Niaga’s business recalibration initiatives are progressing well," Zafrul said.

Moving forward, the group is relatively cautious on the growth prospect in view of rising global tensions and market uncertainties but would remain focused on achieving its targets, subject to recovery in the capital market and improved asset quality across the countries it operated in, he added.

He added the group was finalising its next mid-term growth plan which would be strongly premised on customers, people and sustainability.

The group has declared a first interim net dividend of 13.00 sen per share to be paid via cash or an optional dividend reinvestment scheme.

The total interim dividend amounts to about RM1.22 billion, translating to a dividend payout ratio of 51.6 per cent of net profit in the first half.

Separately, Zafrul declined to comment on market speculation that its group chairman Nazir Razak - the brother of former Malaysian prime minister Najib Razak - is stepping down following changes in the top management of CIMB's major shareholder Khazanah Nasional.

"He is still our group chairman, our non-executive group chairman, so I am not sure what you are implying, there is no change," said Zafrul.

With additional reporting by Melissa Goh.

Editor's note: This story has been updated to reflect the portion of profit which is attributable to the owners of the parent.

Source: Bernama/Reuters/CNA/aj

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