UPDATE 1-Malaysia's CIMB posts record net interest income in Q1

Thu May 22, 2014 6:20am EDT

Related Topics

* CIMB Q1 net profit fell 22 percent

* Strong loan growth in Southeast Asian markets

* Thailand a concern due to political tensions (Adds details)

By Yantoultra Ngui

KUALA LUMPUR, May 22 (Reuters) - CIMB Group Holdings Bhd , Malaysia's second-largest lender, posted its highest quarterly net interest income in 13 years, but future growth may slow due to political tensions in Thailand and challenging environment in Indonesia.

CIMB, Southeast Asia's fifth-largest bank by assets, earned net interest income of 2.066 billion ringgit ($642.81 million) in the first quarter to March, the highest since 2000, thanks to strong growth in regional corporate banking and consumer banking in Malaysia and Singapore.

Southeast Asian banks have been on a roll, benefiting from booming property markets and double-digit growth for both consumer and corporate loans in rapidly expanding economies like Indonesia, Singapore and Thailand.

Both CIMB and rival Maybank notched up record annual earnings last year, while Singapore's top three, led by DBS Group Holdings, all booked their best-ever first quarter last month.

But now CIMB sees challenging operating environments ahead in Indonesia and Thailand, its second and third-largest earnings contributors respectively.

"The operating environment in the regional capital markets as well as Indonesia as a whole remain challenging," CIMB Group Chief Executive Nazir Razak said in the statement on Thursday. "We also have to adjust our growth expectations in Thailand as political tensions show little sign of abating," he added.

CIMB posted a 23 percent year-on-year drop in first-quarter net profit, mainly due to a net gain from the sale of a business unit CIMB Aviva in the same quarter a year earlier.

Without the net gain, net profit for January-March rose 4.4 percent to 1.07 billion ringgit from 1.02 billion ringgit a year ago, driven by stronger growth in Singapore, regional corporate banking, Malaysian and Singapore consumer banking, the bank said.

Revenue for the quarter dropped 10.3 percent year-on-year to 3.54 billion ringgit, according to filing with the local stock exchange.

Shares of CIMB, which counts state investor Khazanah Nasional as major shareholders, have fallen 3.41 percent so far this year, underperforming the broader market this year which has climbed 0.54 percent.

Bigger rival Maybank is scheduled to report earnings on May 29.

($1 = 3.2140 Malaysian ringgit) (Reporting by Yantoultra Ngui; Editing by Sunil Nair, Edwina Gibbs and Matt Driskill)