CIMB Group records strong FY23 performance

KUALA LUMPUR: CIMB Group Holdings Berhad today announced a strong financial performance with net profit increasing by 28.3% to RM6.98 billion for the financial year ended Dec 31, 2023 (FY23), compared to RM5.44 billion in the preceding year. Profit before tax (PBT) increased 14.0% YoY to RM9.54 billion, translating to earnings per share (EPS) of 65.5 sen with a return on average equity (ROE) of 10.7%.

This represents a strong improvement from 9.0% reported ROE recorded in the previous financial year ended Dec 31, 2022 (FY22).

The FY23 performance was underpinned by robust operating income growth with solid loan and CASA growth from all core markets, coupled with lower provisions from prudent risk management and recoveries.

Accordingly, the Group proposed an all-cash second interim dividend of 18.50 sen per share, bringing the total proposed annual dividend to 36.00 sen per share for a payout ratio of 55.0%, in line with the Group’s dividend policy. In addition, the Group is also proposing a special dividend

payout of RM747 million or 7.00 sen per share. This translates to a record total dividend payout of RM4.59 billion for FY23, providing shareholders with higher returns.

FY23 operating income rose 5.9% YoY to RM21.01 billion, driven by non-interest income (NOII), which grew strongly by 36.5% to RM6.39 billion from investment and market-related income. This offset the challenging net income margin (NIM) environment caused by the continued elevated cost of deposits with net interest income (NII) dipping 3.5% to RM14.63 billion.

CIMB Group’s total gross loan growth momentum continued, rising 8.3% YoY driven by stronger demand across targeted key markets and segments, whilst total deposits grew by 8.1% YoY. In addition, total CASA expanded strongly by 11.5% YoY, leading to a CASA ratio of 41.2% as at Dec-23, reflecting the positive impact of the Group’s strategy to enhance its CASA franchise.

Cost-to-income ratio (CIR) was marginally higher YoY at 46.9%, with FY23 operating expenses rising by 6.9% YoY from cost inflation and technology investments. This led to the Group’s pre provisioning operating profit (PPOP) growing 5.1% to RM11.15 billion.

Total provisions declined significantly by 26.4% YoY, attributed to the moderated credit environment and sustained improvement in asset quality from portfolio reshaping.

For the fourth quarter (4Q23), the Group recorded a 15.6% increase in PBT to RM2.33 billion and 29.4% growth in net profit to RM1.72 billion compared to the same period in the previous year, driven by overall strong revenue growth in core markets and lower provisions. On a QoQ

basis, operating income increased 1.3% from growth in NOII, attributed to higher fees and gain on the sale of CGS-CIMB but partially offset by lower NII from NIM compression in Indonesia.

However, operating expenses increased 5.3% from year end accruals whilst provisions rose by 27.9% due to top up consumer overlays in Thailand. Accordingly, PBT was lower 6.5% at RM2.33 billion, and net profit dipped by 7.2%, to RM1.72 billion.

The Group’s FY23 results reflect another year of strong performance where it met most of its financial targets. The Group continues to be well capitalised as its Common Equity Tier 1 (CET1) ratio remained strong at 14.5% as at Dec-23.

CIMB Group CEO Datuk Abdul Rahman Ahmad said, “We are extremely pleased with the FY23 financial performance especially given the challenging industry NIM environment caused by the higher cost of deposits across key markets. This is attributable to the positive impact from the successful execution of our Forward23+ strategic plan particularly in enhancing our CASA franchise and driving our asset quality improvements sustainably. Our diversified Asean portfolio continues to be key, which has helped us deliver growth, while mitigating downside risks in weaker markets”.

“This strong financial performance has afforded us the ability to optimise capital and declare a higher dividend payout of 55.0%, as well as provide for a special dividend of RM747 million, bringing total dividends for FY23 to RM4.59 billion as a reward to CIMB’s shareholders for their

continuous support,” he further added.

Moving into 2024, he said the Group remains vigilant of the global economic uncertainties due to geopolitical tensions and concerns of slowdown in China, together with continued industry competition for deposits.

“Our priority remains on completing our Forward23+ strategic plan and delivering on key focus areas, such as affluent and wealth management, strengthening our CASA and deposit franchise, as well as implementing effective balance sheet management to improve NIM regionally.

“Investments into technology and operations to strengthen resiliency and digital platform reliability where we invested close to RM3.44 billion in capital expenditure over the last four years have borne meaningful impact as our digital platforms’ availabilities have remained above target and delivered strong growth in digital transactions and revenue. As we develop our strategy beyond Forward23+, our focus now shifts towards accelerating our digital initiatives to transform customer acquisition and experience, structurally reducing cost to operate and deliver sustainable returns from our digital ventures,” he added.