KUALA LUMPUR: CIMB Group Holdings Bhd's net profit grew 15.3 per cent to RM1.64 billion the first quarter ended March 31, 2023 (1Q23) from RM1.43 billion a year ago, driven by sustained operating income growth, strong cost controls and contained level of provisions.
CIMB, in a statement today, said the performance translated to a strong improvement in annualised return on average equity (ROE) of 10.3 per cent compared to 9.6 per cent in 1Q22.
Quarterly revenue increased to RM5.0 billion from RM4.74 billion previously, driven by non-interest income (NOII) which grew 24.3 per cent year-on-year (YoY) to RM1.48 billion, contributed by improved investment, foreign exchange, and other income.
As a result, its earnings per share rose to 15.42 sen from 13.96 sen in 1Q22.
According to CIMB, its net interest income (NII) dipped marginally 0.8 per cent YoY to RM3.52 billion.
This was due to net interest margin (NIM) compression caused by heightened deposit competition but was partially offset by strong loan growth momentum.
Its total gross loans increased 7.4 per cent YoY across key markets and segments, especially in Indonesia which grew 10.1 per cent YoY.
CIMB's deposits increased 6.1 per cent YoY, while total current account savings account (Casa) declined due to greater consumer spending on the back of post pandemic growth in economic activity, as well as the migration to higher yield term deposit which led to a lower Casa ratio of 37.9 per cent.
CIMB's cost-to-income ratio (CIR) improved YoY to 46.9 per cent, as 1Q23 operating expenses rose 2.9 per cent YoY due to absence of one off non-recurring expenses recorded in prior year.
Total provisions were contained, rising only five per cent to RM445 million despite the absence of recoveries in 1Q22.
CIMB Group chief executive officer Datuk Abdul Rahman Ahmad said the bank's positive 1Q23 performance was contributed by robust NOII expansion, strong loan growth momentum across all segments of its business and sustained asset quality and cost discipline.
He added that the bank was pleased with the strong performance and contribution growth from Indonesia, reflecting the positive trajectory and impact of our focused Asean strategy.
"Focused execution of initiatives under our Forward23+ strategic plan, particularly on accelerating efforts to expand our Casa and deposits franchise across our target segments remains our key priority as we continue to monitor the heightened deposit competition across all markets.
"We will maintain a close watch of the current turbulent economic environment posed by the elevated interest rates and inflation by continuing to strengthen our business and operational resiliency, whilst supporting our customers through volatile market conditions," he said.
On its outlook, Abdul Rahman said CIMB looked to further accelerate growth in key markets and segments such as Indonesia and small and medium enterprise (SME), while sustaining its risk and asset quality management as well as improving its technology and operational resilience to bolster the bank's positive ROE momentum.
He noted that CIMB's strong capital position equips the bank with sufficient safeguards for any market uncertainties and allowef it to continue its investment in key identified areas that will support the group's growth, strengthening its position to be the leading focused Asean bank.
"With intensified focus to collectively combat scams, we are further committed to implementing the necessary security initiatives as mandated by Bank Negara Malaysia to safeguard against financial scams with the recent mandatory customer call verification process for all first-time app logins and SecureTAC authorisation for all financial and key non-financial transactions, with additional measures to be introduced progressively throughout the year," he added.