CIMB Group Holdings Berhad announced its performance for the financial year ended 31 December 2021, registering a core net profit of RM4.65 billion, up 289.3% YoY. The Group also recorded a core pre-provisioning operating profit of RM9.43 billion, an increase of 14.9% YoY, and core profit before tax of RM6.35 billion, up 314.7% YoY.
The FY21 performance translates to a core annualised return on average equity (“ROE”) of 8.1% and core earnings per share of 46.4 sen. The Group proposed a second interim dividend of 12.55 sen per share, bringing the proposed annual dividend to 22.99 sen per share for a payout ratio of 50% based on core net profit, in line with the Group’s dividend policy
The improved performance was driven by higher operating income with recovery across all segments and markets and further supported by strong cost controls and significantly lower provisions. FY21 core operating income improved to RM18.37 billion, up 8.2% from RM16.99 billion. Out of this, net interest income (“NII”) grew by 11.5% to RM13.96 billion, largely driven by net interest margin expansion and rebounding loan growth at 3.3% YoY. However, core non-interest income was 1.1% lower YoY at RM4.41 billion due to lower trading and FX gains.
CIMB added that cost remained tightly managed, with core operating expenses rising only 1.8% YoY to RM8.94 billion contributing to the improvement in core cost-to-income ratio (“CIR”) to 48.6% for FY21 from 51.7% in FY20.
Core total provisions decreased by 53.6% YoY to RM3.16 billion from reduced overlays and nonretail provisions. However, it said that provisions remained relatively elevated in the fourth quarter due to overlays and top-up provisions taken on legacy credit accounts impacted by the pandemic.
CIMB had also communicated on the processing error that was related to a specific third-party financial remittance service, which led to a limited number of customers receiving duplicate credits to their accounts. It said it is pursuing the necessary measures to recover the duplicate payments from the affected customers. In view of the on-going assessment and recovery measures, the Group says it has provided for the majority of the exposure with an ECL of RM280.9 million in FY21.
On a quarterly basis, in 4Q21 CIMB Group registered a stronger quarter-on-quarter core operating income of RM4.60 billion, 4.8% higher compared to the third quarter ended 31 December 2021. However, despite solid operating income growth, 4Q21 core PBT was muted QoQ at RM1.08 billion against 3Q21 due to elevated provisions. In comparison, on a YoY basis, 4Q21 core operating income declined slightly by 1.3%, whilst core PBT grew by 552.4% and core net profit increased by 277.2% due to significantly lower provisions compared to 4Q20 at the peak of the pandemic’s economic disruption.
The Group’s reported net profit also rebounded strongly QoQ and YoY in 4Q21, at RM855 million compared to a reported net loss of RM101 million in 3Q21 and net profit of RM215 million in 4Q20 respectively. Similarly, FY21 reported net profit also improved significantly, rising by 259.6% YoY to RM4.30 billion compared to RM1.19 billion in FY20. The FY21 reported net profit includes the net impact of all exceptional items recognised in FY21 which collectively amount to a post-tax net charge of RM353 million.
This comprises among others the non-cash, non-recurring impairment of goodwill on CIMB Thai of RM1.22 billion recorded in 3Q21 and RM481 million in transformational costs, intangible assets write-off and accelerated amortisation incurred for FY21, which were partially offset by the positive gain on the deconsolidation of TNG Digital of RM1.16 billion recorded in 1Q21 and deferred tax asset (“DTA”) gain on Cukai Makmur of RM118 million recognised in 4Q21.
Dato’ Abdul Rahman Ahmad, Group Chief Executive Officer of CIMB Group, said, “We have seen strong underlying operational performance recovery across all our business segments and geographies, driven by solid growth in operating income, discipline in containing cost escalation and lower provisions as per our target.”
“We also made considerable progress on our Forward23+ strategic plan where we were able to meet or exceed all our FY21 profitability targets across ROE, CIR and credit cost/provisions.
The groups other business namely Touch ‘n Go Digital’s registered users increased to 16.8 million, up 10.5% YoY. GO+, the investment offering available in Touch ‘n Go eWallet, has also exceeded 2 million investors, with total assets under management growing by 261.8% in 4Q21 to RM492 million as at December 2021. Elsewhere in the region, CIMB Philippines grew its customer base by 64.5% to 5.1 million customers and its deposit book by 75.2% to RM1.29 billion.