CEO Abdul Rahman said the savings competition is not as intense in the Thailand and Indonesia markets.
KUALA LUMPUR: CIMB Group
Holdings Bhd expects pockets of competition in the fixed deposit market in the quarters ahead, albeit at a more subdued pace.
“In terms of our overall margins, the second quarter (2Q) saw a contraction of two basis points so this shows that competition is still coming through in the 2Q.
“However, the contraction we saw in the 1Q was significantly lower. Hence, while there is still competition, it has significantly receded in the 2Q,” said group chief financial officer Khairul Rifaie.
“Looking to 3Q and 4Q, we have some visibility that there are still some pockets of competition coming through.
“We have explored in terms of our market rates and deposit pricing, to try and price it lower and we are still continuing to do that, coming off from successful execution of that in the 2Q,” he said during a briefing of the company’s results here yesterday.
On this note, group chief executive officer Datuk Abdul Rahman Ahmad said the savings competition is not as intense in the Thailand and Indonesia markets.
“The challenge is slightly different there. Of course, we have competition but in terms of how much interest rates have gone up vis a vis the cost of deposits that have gone up, I think it is manageable.
“The bigger challenge for these two markets is on the asset yield side, which entails the passing of interest rate increases to customers,” he said.
For the first half ended June 30, 2023 (1H23), CIMB recorded a net profit of RM3.42bil, an increase of 26.2% year-on-year (y-o-y), from RM2.71bil in 1H22.
The group’s pre-tax profit for 1H23 rose by 13.6% y-o-y to RM4.72bil driven by strong operating income growth, stringent cost controls and lower provisions as the banking group benefited from its diversified Asaen portfolio, with strong business growth recorded in Indonesia and Singapore.
Total gross loans and deposit growth posted a 8.3% and 9.5% y-o-y increase respectively, across key markets and business segments. Total current account savings account (CASA) contracted marginally y-o-y but improved 5.7% quarter-on-quarter driven by regional initiatives that are starting to bear fruit. This led to a sustained CASA ratio of 38.5% as at the end of June.
“One of the key focuses within the development of Forward 23+ is the acceleration and enhancement of our CASA and deposit franchise. On the digital side, we launched our OCTO app and I think in terms of adoption it has been very positive. When people use this app more and more, we will be able to capture their CASA easily.
“The second part is how we can actually get partners to mobilise greater CASA. We also have a lot more to deliver on the non retail deposit segment. We are not the largest player within this particular market, so I think the opportunity for us to grow is still very significant. While there may be competition coming from entrants (digital banks), this does not detract us from focusing on our CASA and deposit franchise,” Abdul Rahman said.
In terms of operating income, CIMB saw a 7.4% increase y-o-y to RM10.33bil.
Of this, non-interest income recorded a strong growth with a 32% increase y-o-y to RM3.16bil, contributed by stronger markets-related and other income.
