KUALA LUMPUR – CIMB Group Holdings Bhd incurred a credit loss of RM280.9 million in 2021 due to a processing error that saw excess funds deposited into more than 10,000 customer accounts.
CIMB said it had proactively taken expected credit losses (ECL) in Q4 FY2021.
“As communicated in January 2022, the group discovered a 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. The group 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 has prudently provided for the majority of the exposure with an ECL of RM280.9 million in the 2021 financial year,” CIMB group chief executive officer Datuk Abdul Rahman Ahmad was quoted saying in a statement published by Bernama.
The statement added that depending on the group’s recovery engagement and outcome with customers, an additional and lower final provision amount may be taken in the first quarter of 2022.
Group posts Q4 net profit of RM854.5 million
Meanwhile, the group recorded an improvement in its bottom line performance in the fourth quarter (Q4) ended December 31, 2021, with a net profit of RM854.51 million.
This compared with a net loss of RM100.59 million in the third quarter of 2021 and a net profit of RM214.98 million in the fourth quarter of 2020, according to its filing with Bursa Malaysia today.
Revenue was slightly lower at RM4.59 billion compared with RM4.67 billion a year earlier.
For the full year (FY2021), CIMB posted a RM4.29 billion net profit compared with RM1.19 billion in 2020 while revenue rose to RM19.51 billion versus RM16.98 billion previously.
CIMB has proposed a second interim dividend of 12.55 sen per share (Q4 FY2020: 4.81 sen), bringing the annual dividend to 22.99 sen per share (FY2020: 4.81 sen) for a payout ratio of 50% based on core net profit, in line with the group’s dividend policy, it said in a statement today.
The improved year-on-year (y-o-y) performance was driven by higher operating income amid recovery across all segments and markets, and further supported by strong cost controls and significantly lower provisions, the 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,” Rahman said.
In 2021 total gross loans grew by 3.3% y-o-y, driven by 4.1% growth in Malaysia, 3.9% growth in Indonesia and 4.6% growth in Singapore.
Total deposits increased 7.2% y-o-y while current account and saving account (CASA) continued to grow strongly, up 10.3% y-o-y, with the CASA ratio reaching 42.5% as at December 2021. The group’s loan-to-deposit ratio stood at 85.8% as at the same period, up by 1.3% from the preceding quarter.
Outlook remains mixed
Rahman said while its outlook remains mixed and uncertain due to pandemic-related developments such as the Omicron variant, CIMB believes the economies it operates in will show further recovery in 2022 due to the significant progress of vaccination programmes and the opening up of economic activities.
“We are also hopeful of the progressive migration of customers out of repayment assistance over the year,” he said.
At the same time, CIMB said, it will continue to assist those still impacted through programmes such as the Financial Management and Resilience Programme together with the Credit Counselling and Debt Management Agency as the bank remains committed to helping all impacted customers navigate out of this pandemic.
RM1.2 billion investment in technology
According to Rahman, a key focus investment area is technology and operations, where the group plans to invest close to RM1.2 billion in this financial year as CIMB commits to accelerating its digital transformation and further strengthening its technology and operational resilience.
“In addition, we will intensify efforts to advance our environmental, social and governance agenda, in line with the group’s commitment to mobilise RM30 billion in sustainable finance by 2024.
“Based on this, the group’s key headline targets for FY2022 include core return on equity (ROE) of 8.5 to 9.0%, loan growth of 5.0 to 6.0%, cost-to-income ratio of below 49.0% and maintaining our Common Equity Tier 1 ratio above 13.0%,” he said.
He, however, noted that CIMB’s reported ROE performance will likely be sustained at 7.0 to 8.0%, affected by the one-off Cukai Makmur introduced in Malaysia for 2022. – The Vibes, February 28, 2022
