CIMB’s Quarterly Profit Declines 10% on Tough Indonesian MarketChong Pooi Koon
CIMB Group Holdings Bhd., Malaysia’s second-largest bank, posted a 10 percent drop in profit last quarter as it warned of a “challenging” outlook for its Indonesian business in the final months of the year.
Net income fell to 949.9 million ringgit ($301 million), or 11.4 sen per share, in the three months ended June 30, from 1.05 billion ringgit, or 14 sen per share, a year earlier, according to a statement from the Kuala Lumpur-based company. CIMB named Tengku Zafrul Tengku Abdul Aziz as acting chief executive officer starting Sept. 1, replacing Nazir Razak who will become the firm’s chairman.
The company controls Bank CIMB Niaga Tbk in Indonesia and has a fifth of its assets in Southeast Asia’s largest economy, which grew last quarter at the slowest pace since 2009. Rival Malayan Banking Bhd. said yesterday second-quarter earnings expanded at the slowest pace in about four years amid a slowdown in its investment-banking business.
“It was a difficult first half,” Nazir said in the statement. “The operating environment in Indonesia is expected to remain challenging.”
Net interest income climbed 10 percent to 2.18 billion ringgit in the three months through June from a year earlier, CIMB said. Net non-interest income dropped 19 percent to 871 million ringgit, the company said.
Shares of CIMB lost 0.8 percent to 7.34 ringgit as of 3:50 p.m. local time. The stock has fallen 3.7 percent this year, compared with a 0.2 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index.
CIMB started merger discussions with RHB Capital Bhd. and Malaysia Building Society Bhd. to create the country’s biggest banking group by assets, according to a joint statement last month.