Net profit for the three months ended June 30 totalled RM872.8 million compared with RM639.8 million in the same quarter last year.
Net interest income rose 3.5 per cent year-on-year to RM2.35 billion while net non-interest income fell 2.6 per cent to RM1.14 billion from a year earlier, the Nikkei Asian Review (NAR) reported.
For the first six months of this year, net profit grew 38.5 per cent to RM1.69 billion from RM1.22 billion in the same period last year.
Net interest income climbed 6.3 per cent to RM4.74 billion from RM4.46 billion compared with the preceding year’s corresponding period while net non-interest income slipped 11 per cent to RM2.04 billion, said the NAR report.
Despite the profit, however, CIMB Group said it might miss two of its annual financial targets as economic growth in its key Southeast Asian markets decelerates.
According to the NAR report, the bank has cut this year’s loan growth forecast to between 6 per cent and 7 per cent from 10 per cent while return-on-equity is now expected to come in at “around 9 per cent” this year, a tad shy of the original 10 per cent target, said CIMB Group’s Chief Executive Zafrul Aziz.
Return-on-equity was 8.1 per cent while total loans expanded 6.6 per cent at the end of June.
“While we expect a better performance in the second half, our loan growth and ROE expectations will likely be below our original 2016 target,” Zafrul told reporters at an earnings briefing.
“However, all other targets like capital, cost and dividend payout remain on track,” NAR quoted him as saying.
CIMB Group is aiming to raise the so-called common equity Tier 1 capital, a key measure of a bank’s financial strength, to 11 per cent this year from 10.3 per cent as on 2015-end, while cutting its cost-to-income ratio to below 53 per cent from 55.6 per cent last year.
The NAR report said CIMB Group also planned to pay 40 per cent of its profits as dividends this year.
A sharp increase in profits from consumer banking — fuelled by the consumer loans growth, lower overhead costs and provisions — helped offset the impact of weak capital market activities that weighed on investment banking business, the company said.
“We are cautious on balance sheet growth, given the continued volatility and uncertainty in the external economic environment,” NAR quoted Zafrul as saying.
Economic growth in CIMB Group’s home base Malaysia has been decelerating through the past six quarters and the economy is projected to expand between 4 per cent and 4.5 per cent this year.
“We remain upbeat on CIMB Niaga’s performance although the local operating environment may continue to be challenging,” Zafrul said. “CIMB Malaysia and CIMB Singapore’s performance is expected to be subdued in line with the slower economic environment in both countries.”
Shares of CIMB Group rose 2.1 per cent to RM4.80 on Monday while the benchmark FTSE Bursa Malaysia KLCI ended 0.1 per cent lower.