CIMB’s Indonesian unit posts big jump in profit
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CIMB Group Holdings Bhd’s 97.9% owned Indonesia-based subsidiary PT Bank CIMB Niaga Tbk, boosted its unaudited consolidated net profit by 318.2% to 736 billion rupiah (RM228.4mil) for the six-month period ended June 30, 2016 (H1).
The fifth largest bank in Indonesia by assets said in a statement that the higher net profit, which translated to earnings per share of 29.29 rupiah, was due to a 4.8% rise in net interest income (NII) to 5.81 trillion rupiah (RM1.81bil), a 24.1% jump in non-interest income to 1.46 trillion rupiah (RM453mil) and a 7.9% fall in provision expense.
Its president director Tigor M. Siahaan said: “Despite the challenging environment, our H1 top line performance continued to improve. The 4.8% year-on-year (y-o-y) NII growth was recorded against a decline in interest expense, while non-interest income was 24.1% higher y-o-y due to better treasury and capital markets businesses.”
He said CIMB Niaga maintained good control over its operating expenses which fell by 1.2% y-o-y.
“In addition, the provisions for non-performing loans had gradually improved.”
As the bank retained a conservative growth strategy, total gross loans were lower y-o-y at 175.34 trillion rupiah (RM54.41bil) as at June 30.
Despite the slower overall growth in CIMB Niaga’s loans, selected business segments recorded encouraging performance.
The personal and multipurpose loans business grew 9.2% y-o-y through the bank’s X-tra Dana product, while the credit card segment posted a 25.5% y-o-y growth to 7.18 trillion rupiah (RM2.23bil).
“In addition, the provisions for non-performing loans had gradually improved.”
As at end June 2016, the bank had issued over 2.1 million credit cards, an increase of 13.4% from a year earlier.
To date, CIMB Niaga is the third largest credit card issuer in Indonesia, in addition to being the fifth largest bank with total assets of 239.38 trillion rupiah (RM74.33bil).
Its current account savings account (CASA) grew 5.7% y-o-y to 93.21 trillion rupiah as at June 30, with the CASA ratio rising 457 basis points (bps) y-o-y to 51.99%.
The loan to deposit ratio was higher at 96.54% at end-June 2016 compared to 95.81% in the same period last year.
The Indonesian government has appointed CIMB Niaga as a perception bank assigned to accommodate funds repatriated by taxpayers who are participating in Indonesia’s tax amnesty programme.
“With additional liquidity available through the programme, the national banking industry, CIMB Niaga included, will have greater capacity to disburse loans to various sectors,” Tigor said.
CIMB Niaga’s capital adequacy ratio strengthened y-o-y to 17.62% as at June 30.
“We will continue to selectively increase our assets with a key focus on cost management and asset quality.
“We started 2016 on a more positive note and seen the potential of gradual improvement in the second half of the year, backed by numerous macroprudential government fiscal and monetary policies to stimulate sustainable economic growth,” added Tigor.
Questions & Answers
Q.What were the main reasons for the significant jump in CIMB Niaga's net profit?
What were the main reasons for the significant jump in CIMB Niaga's net profit?
The substantial profit increase was primarily driven by a 4.8% rise in net interest income, a 24.1% jump in non-interest income, and a 7.9% fall in provision expense during the six-month period.
Q.How did CIMB Niaga's loan strategy perform despite the overall conservative approach?
How did CIMB Niaga's loan strategy perform despite the overall conservative approach?
While total gross loans were lower year-on-year due to a conservative growth strategy, specific segments showed strength. Personal and multipurpose loans grew by 9.2%, and credit card growth was 25.5%, reaching 7.18 trillion rupiah.
Q.What role has the Indonesian government assigned CIMB Niaga in the tax amnesty programme?
What role has the Indonesian government assigned CIMB Niaga in the tax amnesty programme?
The Indonesian government has appointed CIMB Niaga as a perception bank. This means it is assigned to accommodate funds repatriated by taxpayers participating in Indonesia’s tax amnesty programme, which should increase banking liquidity.
Q.What was the growth in CIMB Niaga's credit card business and its market position?
What was the growth in CIMB Niaga's credit card business and its market position?
The credit card segment saw a 25.5% year-on-year growth to 7.18 trillion rupiah, with over 2.1 million cards issued. CIMB Niaga is now the third largest credit card issuer in Indonesia.
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