CIMB group chief executive officer Datuk Abdul Rahman Ahmad said the bank will focus on the execution of initiatives under its Forward23+ strategic plan moving forward.

KUALA LUMPUR (May 31): CIMB Group Holdings Bhd’s net profit grew 15.27% to RM1.64 billion for the first quarter ended March 31, 2022 (1QFY2023), from RM1.43 billion a year earlier, driven by sustained operating income growth, strong cost controls and a contained level of provisions.

This translated to a strong improvement in annualised return on average equity (ROE) of 10.3%, compared with 9.6% in 1QFY2022, and earnings per share of 15.4 sen versus 13.96 sen previously, the group said in a bourse filing.

Quarterly revenue rose 5.51% to RM5 billion, from RM4.74 billion last year, driven by non-interest income (NOII) which grew 24.3% year-on-year (y-o-y) to RM1.48 billion on improved investment, foreign exchange, and other income.

However, net interest income (NII) dipped marginally by 0.8% y-o-y to RM3.52 billion, due to net interest margin (NIM) compression caused by heightened deposit competition, but was partially offset by strong loan growth momentum.

CIMB’s total gross loans increased 7.4% y-o-y across key markets and segments, especially in Indonesia, which saw a 10.1% y-o-y growth.

Deposits also increased by 6.1% y-o-y, while total current account, savings account (CASA) declined. This, the group said, was due to greater consumer spending on the back of post-pandemic growth in economic activity, as well as the migration to higher yield term deposits which led to a lower CASA ratio of 37.9%.

CIMB said its cost-to-income ratio (CIR) improved y-o-y to 46.9%, as 1QFY2023 operating expenses rose 2.9% y-o-y due to the absence of one-off non-recurring expenses recorded in the prior year.

Meanwhile, total provisions were contained, rising only 5% to RM445 million despite the absence of recoveries in 1QFY2022.

On a quarter-on-quarter basis, CIMB's net profit was 24.25% higher from RM1.32 billion in 4QFY2022, while operating income fell 4.26% from RM5.22 billion, due to elevated cost of deposits.

However, cost improved 5.8% and provisions were lower by 40.2% due to the absence of accelerated accruals and additional provisions overlays made in 4QFY2022.

The group’s capital position remains strong and above target with its common equity tier 1 (CET1) ratio at 14.3% as at March 2023.

CIMB did not declare any dividend for the first quarter.

Moving forward, CIMB group chief executive officer Datuk Abdul Rahman Ahmad said the bank will focus on the execution of initiatives under its 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 added.

CIMB shares closed 1.43% or seven sen lower at RM4.82 on Wednesday (May 31) for a market capitalisation of RM51.41 billion.