Malaysia lender CIMB Q1 profit soars 45% to record as economy strengthens

A customer leaving a branch of Malaysia's CIMB Bank in Kuala Lumpur. PHOTO: REUTERS

KUALA LUMPUR (REUTERS) - CIMB Group Holdings posted a 45 per cent jump in first-quarter profit to a record as Malaysia's second largest lender by assets made more profitable loans at home, boosted income from non-lending activities and took lower provisions.

Malaysia's economy is strengthening in 2017 after a period of tepid growth caused by a downturn in commodity prices and the shadow of a corruption scandal involving state-owned fund 1Malaysia Development Berhad. That is benefitting CIMB and its bigger rival Malayan Banking Bhd, which will report results on Thursday.

CIMB reported on Wednesday (May 24) a net profit of RM1.18 billion ($274.39 million) for January-March compared to RM813.8 million a year ago. That beat an average RM803.5 million estimate of two analysts surveyed by Reuters.

"The group is cautiously optimistic for the rest of 2017, with more stable economic conditions, increased regional activity, improved capital markets and declining provisions across our key geographies," group chief executive Zafrul Aziz said in a statement.

CIMB's net interest income for the quarter rose 11.5 per cent as loans grew 12.2 per cent and net interest margin (NIM) improved to 2.72 per cent from 2.62 per cent in the year-ago quarter. Non-interest income surged 32.3 per cent.

CIMB's regional operations overall were steady, with the non-Malaysia business contributing 28 per cent of the group's pre-tax profit in the quarter compared to 26 per cent a year ago.

The Indonesian unit, CIMB Niaga, a bugbear previously, has improved its performance and helped the Southeast Asian nation's pre-tax profit for CIMB soar 135.5 per cent to RM292 million.