CIMB Group Holdings Berhad announced a profit before tax (PBT) of RM454 million for the third quarter ended 30 September 2020 (3Q20), up 132% quarter-on-quarter (QoQ) compared to the second quarter ended 30 June 2020 (2Q20).
CIMB registered a net profit of RM194 million in 3Q20. For the nine months ended 30 September 2020 (9M20), CIMB Group registered a PBT of RM1.36 billion and net profit of RM979 million. This translates to an annualised ROE of 2.3% and EPS of 9.9 sen for 9M20.
On a QoQ basis, 3Q20 operating income grew by 15.5% to RM4.47 billion from RM3.87 billion in 2Q20, driven by a 10.0% increase in net interest income (NII) to RM3.23 billion and 32.9% increase in non-interest income (NOII) to RM1.24 billion. The strong growth in NOII was due to improved trading and FX activity in 3Q20. Pre-provisioning operating profit (PPOP) increased by 29.9% to RM2.26 billion QoQ.
The challenging operating environment from the ongoing COVID-19 pandemic continued to affect the Group’s performance. Elevated provisions in key markets on specific accounts to strengthen the balance sheet, adjustments due to macro-economic factors (MEF) and modification loss arising from the moratorium given to borrowers in Malaysia also impacted performance.
However, the Group’s underlying business remains resilient as operating income grew QoQ across nearly all segments, with gross loans and deposits increasing by 1.6% and 6.1% respectively, while the CASA ratio strengthened to 40.0%.
CIMB continues to drive down costs through prudent cost optimisation measures and deferment of non-essential expenditure Group-wide. 9M20 operating expenses (Opex) have declined by 5.5% to RM6.65 billion year-on-year (YoY), with tight cost controls leading to a cost reduction in most segments. Including modification loss, 9M20 cost to income ratio (CIR) stood at 53.3%.
On a QoQ basis, the CIR improved to 49.4% in 3Q20 compared to 55.0% in the preceding quarter due to the positive JAWS, in addition to the modification loss impact in 2Q20. Excluding the modification loss impact, 3Q20 CIR stood at 50.5% while 9M20 CIR stood at 52.5%.
CIMB Group’s total gross loans and total deposits contracted marginally, declining by 0.9% and 0.4% respectively on a QoQ basis as at Sep-20. The Group’s loan-to-deposit (LDR) ratio stood at 87.7%, a slight decrease from 88.2% in the preceding quarter. However, the CASA ratio continued to strengthen to 40.0% as at Sep-20, up 1.6% QoQ. In addition, 3Q20 net interest margin (NIM) increased by 16 bps to 2.31% QoQ.
“In Malaysia, CIMB has continued the focus to help its affected borrowers to navigate through the challenging environment caused by COVID-19. CIMB has reached out and engaged more than 407,000 borrowers to assist our customers, out of which around 76,000 customers have accepted the repayment relief offered with an approval rate of virtually 100%.
“Further, in line with the government’s recent announcement on the expanded assistance to B40 and micro-enterprise borrowers, CIMB is offering its Expanded Targeted Payment Assistance programme which involves a deferment of monthly installments for a period of 3 months or 50% reduction in monthly
installments for the next 6 months to these segments,” CIMB concluded.
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