CIMB-Best Quarterly Results Thus Far

CIMB has forecast that 2H results of 2010 will be as good as the first half.

CIMB -the country's second largest banking group,posted a record quarterly net profit in the April-June period and is positive on its prospects for the rest of the year.

Net profit in the second quarter was RM889 million, up 34 per cent from a year ago and 6.1 per cent higher than the first quarter's.

Its first half net profit rose 35 per cent to RM1.7 billion, driven by a strong rebound in corporate and investment banking, stronger contribution from its Indonesian unit and a drop in loan loss provision.

"This is our highest-ever three-month and six-month performance. We are positive on the outlook for the second half as there is a strong capital market deal pipeline and consumer growth momentum," group chief executive Nazir Razak told reporters at a results briefing late yesterday.

Analysts expect it to turn in a net profit of RM3.5 billion for the full year.

The group raised its return on equity target for the full year to 16.5 per cent from 16 per cent before. It kept the loan growth target at 12 per cent. Loans increased 11 per cent last year.

The group called off plans to sell a majority stake in its Southeast Asia Special Asset Management Bhd unit, in which it had lumped about RM8.4 billion worth of legacy bad loans.

It would not be "economically sensible" to divest the stake now under the new Basel II risk-based capital adequacy framework, Nazir said.

"With Basel II, that business is actually a lot more valuable to us from a capital and economic standpoint than we thought before," he remarked.

Nazir said CIMB Group will remain conservative in its capital position as it is still in the midst of migrating to the new framework.

Its Indonesian unit, PT Bank CIMB Niaga, was the largest contributor to the group's earnings. It accounted for 36 per cent of the group's profit before tax of RM2.3 billion for the half-year, compared with 18 per cent a year earlier.

CIMB Thai, which returned to profitability in that period, accounted for 1 per cent of the group's pre-tax profit. The Malaysian consumer bank's contribution to group pre-tax profit was slightly lower at 14 per cent, compared with 15 per cent before.

Corporate and investment banking's profit before tax rose about 73 per cent to RM498 million as regional capital markets in the first half were significantly better than a year earlier.

Well, there are many new price forecast. Many say it may breach RM8.30 if market is amenable.