KUALA LUMPUR, May 22 () – CIMB Group Holdings Bhd , Malaysia’s No. 2 bank, reported on Friday a more than 50% drop in first quarter profit after making provisions for expected credit losses and as non-interest income fell.
The decline in profit was much bigger than analysts’ forecasts, although CIMB’s net interest income – a gauge of its underlying financial performance – rose 4.8% to 2.57 billion ringgit ($589 million) on 3.8% loan growth. Deposits also grew by 3.9%.
The bank said it expected continued challenges for the rest of the year but was confident that the banking sector has sufficient buffers to withstand shocks from the coronavirus pandemic.
CIMB, Malaysia’s second largest lender by assets, said net profit totalled 507.9 million ringgit for January-March, down from 1.19 billion ringgit a year earlier and its lowest quarterly profit since the fourth quarter of 2014.
Analysts polled by Refinitiv had forecast a first-quarter profit of 1.06 billion ringgit.
CIMB has now reported declining profits for five consecutive quarters.
Provisions for expected credit losses on loans, advances and financing more than tripled in the first quarter from a year earlier to 967.6 million ringgit, the bank’s financial statement showed.
Meanwhile, non-interest income fell 15.5% due to weaker trading and forex income following the impact of the coronavirus outbreak, CIMB said in a separate statement.
First-quarter revenue dropped 0.7% to 4.14 billion ringgit.
Net interest margin, a key measure of bank profitability, slipped to 2.44% from 2.48% in the first quarter of last year. ($1 = 4.3610 ringgit) (Reporting by Liz Lee; Editing by Susan Fenton)