Malaysian lender CIMB Group Holdings Bhd reported a record quarterly net profit today, helped by lower loan loss provisions and a strong performance in its Indonesian unit.

Malaysian banks are expected to see strong earnings expansion this year helped by the country's economic recovery, which saw second quarter GDP growth of 8.9 per cent, and a boost in corporate activity.

'The highlights were the strong rebound in corporate and investment banking, surge in contribution from CIMB Niaga and drop in loan loss provisions,' Nazir Razak, CIMB's chief executive officer, said.

Earlier this week, its Indonesian subsidiary CIMB Niaga posted 62 per cent rise in first-half net profit to 1.13 trillion rupiah (US$125.9 million).

Last month, its 93.15 per cent owned CIMB Thai Bank returned to a second quarter profit of 365.85 million baht (US$11.63 million) versus a loss of 246 million baht a year ago.

CIMB, valued at US$18.3 billion, said it expects full year return on equity (ROE) to be 16.5 per cent excluding any impact from the recent acquisition of 20 per cent of CIMB Niaga.

'However, we remain conservative on our capital position as we are migrating to Basel II and the international banking reform process has yet to land on some important details,' Razak said.

Analysts tracked by Thomson Reuters I/B/E/S forecast an average full-year net profit of RM3.5 billion for CIMB before the results announcement.

CIMB, Malaysia's top dealmaker and its second-largest bank, posted a 34 per cent increase in April-June net profit to RM889 million (US$282.7 million). Its first half net profit rose 35 per cent to RM1.7 billion.

The company also declared an interim dividend of 4.6 sen per share amounting to a net payment of RM339 million.

Last week, Malaysia's largest lender Malayan Banking (Maybank) posted record full year profits, driven by robust loans growth and said it expects to achieve better earnings in 2011.

Sixteen out of 23 analysts tracked by Thomson Reuters I/B/E/S have a 'buy' or 'strong buy' rating on CIMB, with six calling it a 'hold', and one other a 'sell.'

Shares of CIMB are up 22 per cent so far this year, outperforming top lender Maybank's 18.5 per cent rise and the 9.8 per cent gain in the broader market index. -- Reuters