Published November 14, 2008

Bumi-Commerce Q3 pre-tax profit falls nearly 40%

Group expects better Q4 capital market performance

By PAULINE NG
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MALAYSIA'S Bumiputra-Commerce Holdings has posted a third-quarter pre-tax profit of RM572 million (S$240 million) - almost 40 per cent down from Q2, as global financial turmoil undermined its capital market activities.

Mr Nazir: Target of 16% ROE is likely to fall short

The group, which owns CIMB Bank, registered a 22 per cent drop in quarterly revenue to RM1.7 billion. But it expects its capital market performance to improve in Q4, group chief executive Nazir Razak said.

He conceded that the group's 2008 target of a 16 per cent return on equity is likely to 'fall a little short' and warned of 'extraordinary capital market conditions for the rest of the year as global finance remains in crisis'.

The third quarter was the most testing operating environment since the Asian financial crisis in 1997-98 for capital markets, he said. 'The international and domestic securities markets witnessed unprecedented gyrations in price movements, coupled with low levels of liquidity and investor confidence.'

The pre-tax profit of the group's consumer banking business was flat, but its corporate and investment banking divisions saw profit slip almost 12 per cent. Pre-tax profit on treasury and investment operations plunged a whopping 77 per cent. The group's net profit for the first nine months of 2008 was 29 per cent lower year-on-year at RM1.63 billion, mainly due to a gain on the disposal of an interest in subsidiaries last year. Excluding the gain, net profit was 1.5 per cent higher.

Annualised net ROE for the nine months was 13.8 per cent and net earnings per share were 48.8 sen.

Total loans grew 10.5 per cent over the past 12 months, with Indonesian subsidiary Bank Niaga growing its loans the most - by 31 per cent in rupiah terms.

At end September, the group's off balance sheet total treasury-related commitments and contingencies amounted to RM333.3 billion, versus RM267.2 billion a year earlier.

Mr Nazir has said previously that the treasury contract amounts are only a notional value and the actual exposure 'is very, very small'. The group reiterated yesterday that it does not anticipate any material losses as a result of these various transactions.

The company's shares ended at RM6.10 yesterday, down 10 sen.