KUALA LUMPUR (Aug 28): CIMB Group Holdings Bhd posted a net profit of RM277.08 million in the second quarter ended June 30, 2020 (2QFY20), down 45% from the immediate preceding quarter's RM507.93 million, amid headwinds caused by the pandemic outbreak, which led to a modification loss of RM212.27 million for the loan moratorium granted to customers.

The group also recorded elevated provisions due to macro-economic factors and specific credit provisioning during the quarter. Revenue fell 7% quarter-on-quarter to RM3.87 billion from RM4.14 billion, its results filing today showed.

On a year-on-year basis, net profit declined 82% from RM1.51 billion, while revenue retreated 13% from RM4.47 billion.

In view of the global economic slowdown and uncertainties ahead, its board of directors has decided to prioritise capital management and conservation, and not to propose any interim dividend. It declared a 14 sen dividend in the same quarter last year.

This position, CIMB said, will be reviewed at year-end. "Liquidity management continues to be a priority," it said.

Its net profit for the six months ended June 30 (1HFY20), meanwhile, came in at RM785 million, down 71% y-o-y from RM2.7 billion, while revenue fell 7% to RM8.01 billion from RM8.63 billion.

“The subdued performance in 2QFY20 came within expectations and was largely attributed to the impact of COVID-19. Moving ahead, we expect continued weaker performance for the remainder of 2020 in line with uncertain economic conditions as we recognise elevated provisions arising from the impact of MEF under MFRS9 and take impairments on specific accounts outside Malaysia to strengthen our financial position," said its group chief executive officer Datuk Abdul Rahman Ahmad in a statement.
 
The group's underlying business, meanwhile, remained resilient, he said, with loans and deposits growing 3.9% and 7.8%, respectively, which led net interest income to grow by 6% Y-o-Y, excluding the modification loss' impact.

“To mitigate the impact of the challenging economic environment, we aim to aggressively rationalise cost. We are pleased that cost on an absolute basis has already declined by 3.3% for 1HFY20, and we target an absolute cost reduction of around RM500 million or 5% for full year 2020.

"The group continues to be well-capitalised to withstand shocks through our prudent approach with a strong CET1 ratio and LCR remaining comfortably above 100%," Abdul Rahman added.

CIMB shares settled 7 sen or 2.08% lower at RM3.30 today, giving it a market capitalisation of RM32.75 billion. The counter has declined 36% year to date.

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