CIMB GROUP EYES 4 TO 5 PCT LOAN GROWTH FOR THIS YEAR

KUALA LUMPUR, Feb 26 -- CIMB Group Holdings Bhd is targeting a loan growth of four to five per cent for the entire group, including Malaysia, this year compared to a one per cent contraction in 2020.

Group chief executive officer Datuk Abdul Rahman Ahmad said this year’s growth was expected to come from the consumer side, particularly in Indonesia as well as Malaysia, given the current economic situation whereby demand from consumers had remained strong.

“The underlying consumer demand, especially from those who have not been impacted by the COVID-19 pandemic, in the entire group will remain strong.

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“In Malaysia particularly, we also see strong demand from the commercial side such as the small and medium businesses, especially those with growth related to COVID-19 such as the logistics segment, which has really grown in terms of demand,” he told reporters during a virtual briefing on CIMB Group’s financial year 2020 performance. 

He noted that while the group’s loan growth shrank one per cent year-on-year in 2020, the growth within Malaysia was decent, especially in mortgage and auto segment which grew 8.8 per cent and 7.7 per cent, respectively.

As for the group’s key performance indicators for 2020 which were set in November 2019 prior to the advent of COVID-19, Abdul Rahman said the group had achieved a few targets such as the cost target and capital ratio target of Common Equity Tier 1 (CET1) but did not attain the target on return on equity (ROE).

“In 2021 we are setting ambitious targets to recover and deliver a better financial performance and are optimistic about the performance assuming that the economic recovery continues.

“Among them, the group has set a six to seven per cent ROE target against the 2.1 per cent achieved in 2020,” he said.

Abdul Rahman said this year the group also expected to see a lower provision across all the segments and key operating markets including Malaysia Indonesia, Singapore and Thailand.

“Our credit cost for 2020 was at 1.46 per cent and our guidance for this year is between 80 to 90 basis points,” he said.

On the prospects of the banking sector this year, he opined that the financial industry would remain challenging as the sector’s performance was highly correlated with economic growth.

In his view, the economy will rebound, but the recovery remains patchy and uncertain as the vaccination programme will take time to be implemented. However, he expressed confidence that in the second half of the year, the economy would be a lot stronger.

In terms of dividend, he said CIMB as a principal remained committed to the dividend policy of paying 40-60 per cent of profit, but whether there would be an interim announcement would depend on the capital position of the bank and economic situation for that particular point in time.

“We need to balance the need of the stakeholders to our need to preserve capital so that there will be enough resources to withstand economic headwinds,” he added.

-- BERNAMA