* Q2 provisions up 347% to 1.5 bln rgt, to stay elevated
* Provisioning outside Malaysia related to leisure & hospitality
* 2020 NIM seen squeezed 10-15 bps
* Expects continued weaker performance for rest of 2020 (Adds details, CEO comments on outlook)
By Liz Lee
KUALA LUMPUR, Aug 28 (Reuters) – Malaysia’s CIMB Group Holdings Bhd reported a 81.6% drop in second-quarter net profit, largely due to the economic impact of the coronavirus pandemic, the bank said in a bourse filing on Friday.
Net profit for the three months ended June 30 of 277.1 million ringgit ($66.51 million) was up from 1.51 billion ringgit a year ago but missed the 532.7 million ringgit average estimate by analysts polled by Refinitiv.
Revenue fell 13.5% to 3.9 billion ringgit.
Expected credit losses on loans, advances and financing for the quarter increased almost 350% to 1.47 billion ringgit, its income statement showed.
The lender, Malaysia’s second largest by assets, said provisions were expected to remain high for the rest of the year.
“We will have to take and have been taking specific account impairments, especially for accounts outside of Malaysia,” Group CEO Abdul Rahman Ahmad said in a virtual press briefing, adding that foreign provisioning was focused on the leisure and hospitality sector.
The group said provisional charges in the first half of the year were generally related to Singapore accounts, having previously pointed to the oil and gas sector.
Larger rival Malayan Banking has also posted a drop in profits and a sharp rise in impairment losses, and guided that provisioning will remain high.
Rahman said the short term economic outlook remains challenging, with expectations of a continued low interest rate environment for the rest of 2020, and the group’s loan growth to remain in the low single digits.
Net interest margin, a key gauge of bank profitability, is expected to contract 10-15 bps to 2.31-2.36% this year due to interest rate cuts and after borrowers were given financing moratoriums during Malaysia’s lockdown, the bank said. (Reporting by Liz Lee; editing by David Evans, Kirsten Donovan)