Profit statements

CIMB Q4 net profit nearly quadruples to RM854.51m and pays dividend of SR12.55

KUALA LUMPUR (February 28): CIMB Group Holdings Bhd’s net profit for the fourth quarter ended December 31, 2021 (4QFY21) increased nearly fourfold to RM854.51 million from RM214.98 million it a year ago, due to significantly lower provisions.

Its revenue for 4QFY21, however, fell 1.68% to RM4.59 billion from RM4.67 billion a year ago, its filing with Bursa Malaysia showed.

For the full financial year ended 31 December 2021 (FY21), the group’s net profit also increased nearly fourfold to RM4.3 billion from RM1.19 billion a year earlier, while its revenue increased by 14.87% to RM19.51 billion from RM16 billion. 0.99 billion.

The group has proposed a second interim dividend of 12.55 sen per share, bringing the proposed total annual dividend for FY21 to 22.99 sen per share for a payout ratio of 50% of basic net profit, in accordance to the group’s dividend policy.

The group said in a statement that FY21 performance translated into a basic annualized return on equity (ROE) of 8.1% and basic earnings per share of 46.4 sen.

Improved year-on-year (year-on-year) performance was driven by higher operating profit with recovery across all segments and markets, and supported by tight cost and revenue control. significantly lower provisions, he said.

Its FY21 core operating income increased 8.2% year-on-year to RM18.37 billion; of this amount, net interest income increased by 11.5% to RM13.96 billion, largely driven by net interest margin expansion and rebounding loan growth. 3.3% year-on-year.

CIMB said its core cost-to-revenue ratio was 48.6% for FY21, compared to 51.7% for FY20, with core operating expenses increasing only 1.8% year-on-year to reach RM8.94 billion.

Meanwhile, its total base provisions declined 53.6% year-on-year to RM3.16 billion due to reduced overlays and non-retail provisions. CIMB also noted that the group’s provision coverage had increased to 100.2% excluding regulatory reserve at the end of FY21, from 91.6% the previous year, while the gross impaired loan ratio had slightly increased. decreased to 3.5% as of December 21. The annualized loan loss charge improved to 0.73% in FY21 from 1.51% in FY20, he added.

Given the ongoing assessment and recovery actions from the processing error that occurred at the end of January, the group said it had prudently hedged the majority of the exposure with an expected credit loss of RM280.9 million as of during fiscal year 21.

Provisions notwithstanding, CIMB noted that it met or exceeded its FY21 targets for all profitability metrics, including ROE, cost-income ratio (CIR), and credit cost/provisions.

According to CIMB, the reported net profit for FY21 includes the net impact of all exceptional items recognized in FY21, which collectively amount to a net charge after tax of RM353 million.

This includes, among others, the non-cash and non-recurring impairment of goodwill on CIMB Thai of RM1.22 billion recorded in 3QFY21 and RM481 million in transformation costs, write-off of intangible assets and accelerated amortization incurred for the 21, which were partially offset by the positive gain on deconsolidation of TNG Digital of RM1.16 billion recorded in 1QFY21 and the deferred tax asset gain on Cukai Makmur of RM118 million recorded in 4QFY21.

While the outlook remains mixed and uncertain due to pandemic-related developments such as the Omicron variant, the group’s chief executive, Datuk Abdul Rahman Ahmad, believes that the economies in which the group operates will show further recovery in 2022 due significant progress in vaccination programs and the opening up of economic activities.

“We also hope for the gradual migration of clients out of repayment assistance over the course of the year,” he said.

At the same time, he said the group will continue to help customers still affected through programs such as the Financial Management and Resilience Program (URUS) in collaboration with Agensi Kaunseling dan Pengurusan Kredit (AKPK), as he remains committed to helping all affected customers navigate. get out of this pandemic.

“Our healthy financial position will allow us to continue to serve our customers well as we help the economy and our customers rebuild after the pandemic through our enhanced lending business,” he added.

He also said the group’s priority remained the execution of its Forward23+ strategic plan to build on its positive growth momentum, supported by a focused approach to make the necessary investments in its growth areas such as managing the wealthy. and heritage, banking transactions and ASEAN network activities.

A key investment area, he said, is technology and operations, where the group plans to invest nearly RM1.2 billion in FY22 as it commits to accelerating its transformation. digital and further strengthen its technology and operational resilience.

Furthermore, he said the group will intensify its efforts to advance its environmental, social and governance (ESG) agenda, in line with the group’s commitment to mobilize RM30 billion in sustainable finance by 2024.

“Based on this, the Group’s primary FY22 objectives include core ROE of 8.5% to 9%, loan growth of 5% to 6%, CIR below 49% and maintaining of our Common Equity Tier 1 (CET1) ratio above 13%,” he said.

However, he noted that the group’s reported ROE performance would likely remain at 7% to 8%, affected by the unique Cukai Makmur introduced in Malaysia for 2022.

CIMB closed four sen or 0.71% higher at RM5.71 on Monday, valuing the group at RM57.96 billion.

Over the past year, the counter has increased by 35.31%.

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