Table of Contents

a) Background of CIMB................................................................................................................................3
b) Horizontal analysis of CIMB financial statements....................................................................................3
c) Financial ratios with calculations.............................................................................................................6
References.................................................................................................................................................10
a) Background of CIMB
CIMB is a Malaysian Investment bank, whose full name is Commerce International Merchant
Bankers. It was founded in January 1974 and its headquarters are in Kuala Lumpur. CIMB was
formerly known as Bumiputra Commerce Holdings before it changed to its current name CIMB
in 1986. CIMB is also an expert services provider in Islamic finance. CIMB offers a wide array
of financial services which include consumer, commercial and investment banking.

Over the years, CIMB had acquired several banks and financial services companies to add to its
conglomerate. This includes the acquisition of GK Goh Securities in 2005 and PT Bank Niaga in
2004. CIMB listed on Bursa Malaysia in 1987, with RM35,1 billion as its market capitalization
as at 30 June 2020. Its listings are profitable and the bank delivers high returns which amount up
to 340%. CIMB is involved in investment banking within the ASEAN region, and it is a major
stakeholder of cash equities and investments within the ASEAN region. The operations of CIMB
are across national frontiers, with its branches in India, Korea, Taiwan, Melbourne, Sydney,
London, Hong Kong and New York. It also engages in digital retail banker, being the forefront
service provider in the ten ASEAN countries. CIMB continues to innovate and upgrade its
products and services, and serves as an effective universal banker with a growing franchise. It
serves as a seasoned corporate adviser in the financial services industry. It also engages in asset
management programmes for its clients. (CIMB Website, 2020)

b) Horizontal analysis of CIMB financial statements

This is a technique which is used to highlight changes in amounts of corresponding items in the
financial statements. This comparative tool is used to measure and analyse the trends in the
financial performance of the firm, which can be used to project future trends and adapt to them.
the amount of the latter year is used as the base period, and the percentage change is calculated.
The percentage change is used as an indicator of whether the firm is performing well, or whether
there is a dismal performance. Therefore, by undertaking trend analysis of CIMB Bank Malaysia,
there is an observation of how the firm is faring, and which areas it needs to adjust is operations
to yield better financial results. (Sharker, M. R. 2017)
 Comparative Balance Sheet

December 31, 2019 and 2018

2019 2018 Increase or (Decrease)

Amount RM Percent %
Assets
Current Assets 550,000 533,000 17,000 3.2
Long Term 95,000 177,500 (82,500 ) (46.5)
Investments
Plant Assets 444,500 470,000 (25,500) (5.4)
Intangible 50,000 50,000 --
Assets
Total Assets 1,139,500 1,230,500 (91,000) (7.4)

Liabilities
Current 210,000 243,000 (33,000) (13.6)
Liabilities
Long Term 100,000 200,000 (100,000) (50.0)
Liabilities
Total Liabilities 310,000 443,000 (133,000) (30.0)
Stockholder’s
Equity
Preferred 6% 150,000 150,000 -- --
stock, RM 100
par
Common Stock, 500,000 500,000 -- --
RM10 par
Retained 179,500 137,500 42,000 30.5
Earnings
Total Stock 829,500 787,500 42,000 5.3
Holder’s equity
Total Liabilities 1,139,500 1,230,500 (91,000) (7.4)
and
Stockholder’s
equity
 Comparative schedule of Current Assets

December 31, 2019 and 2018

2019 2018 Increase or (Decrease)

Amount RM Percent %
Cash 90,500 64,700 25,800 39.9
Marketable 75,000 60,000 15,000 25.0
Securities
Accounts 115,400 120,000 (5,000) (4.2)
Receivables
(net)
Merchandise 264,000 283,000 (19,000) (6.7)
Inventory
Prepaid 5,500 5,300 200 3.8
Expenses
550,000 533,000 17,000 3.2

Comparative Income Statement

For Years ended December 31, 2019 and 2018

2019 2018 Increase or (Decrease)

Amount RM Percent %
Sales 1,498,000 1,200,000 298,000 24.8
Cost of goods 1,043,000 820,000 223,000 27.2
sold
Gross profit 455,000 380,000 75,000 19.7
Selling 191,000 147,000 44,000 29.9
Expenses
General 104,000 97,400 6,600 6.8
Expenses
Total Operating 295,000 244,440 50,600 20.7
Expenses
Operating 160,000 135,600 24,400 18.0
Income
Other Income 8,500 11,000 (2,500) (22.7)
168,500 146,600 21,900 14.9
Other expenses 6,000 12,000 (6,000) (50.0)

Income before 162,500 134,600 27,900 20.7

 Income Tax
Income Tax 71,500 58,100 13,400 23.1
Net Income 91,000 76,500 14,500 19.0

Comparative Retained Earnings Statement

December 31, 2019 and 2018

2019 2018 Increase or (Decrease)

Amount RM Percent %
Retained 137,500 100,000 37,500 37.5
Earnings,
January 1
Net Income for 91,000 76,500 14,500 19.0
year
Total 228,500 176,500 52,000 29.5
Dividends:
On preferred 9,000 9,000 -- 33.3
Stock
On common 40,000 30,000 10,000 25.6
Stock
Retained 179,500 137,500 42,000 30.5
Earnings

c) Financial ratios with calculations

 Net Interest Margin
This is a profitability ratio which indicates how well the bank is implementing good investment
decisions. This is the measure of variation between the interest earned by the bank, and the
interest paid out to their lenders in relation to their assets. This ratio serves to indicate the level
of output which the bank is having. An optimum net interest margin for banks is pegged around
3.35%. (Suu, N.D., Luu, T.Q., Pho, K.H. and McAleer, M., 2020)
Net Interest Margin = ( Investment Income−Interest Expenses )
Average Earning Assets
Investment Income−Interest Expenses
Average Earning Assets
RM 70,00−RM 65,000
¿
RM 110,000
 = 4.54%

 Non-interest income ratio

Non-interest income refers to the revenue which a bank earns outside its primary activity of
lending to its customers. This is bank and creditor income derived from other fees such as
insufficient fund fees, annual fees, deposit slip fees and other related fees incurred when the
customers of the bank are making their transactions. (Brunnermeier, M.K., Dong, G.N. and Palia,
D., 2020)
Non−interest Income−Non−Interest Expenses
=
Total Earning Assets
RM 600000−RM 400,000
RM 200,000
=1

 Cost-to-income ratio
This is a ratio which shows the proportion of costs compared to the income which the company
is earning. This ratio is an indicator of profitability because the objective is to minimize costs
while inflating the income of the bank. (Pradhan, R.S. and Parajuli, P., 2017)
OperatingCosts
C/I ratio =
Operating Income
RM 180,000
=
RM 395,000
=45.56%

 Return on Assets
This ratio indicates the percentage of profit which the bank earns in relation to its overall assets.
(Atmoko, Y., Defung, F. and Tricahyadinata, I., 2018)
Net Income
=
Total Assets
RM 91,000
=
RM 1,139,500
=7.9%
  Return on Equity
This ratio indicates the profit which one can earn from their own money invested into the
company. In essence, this indicates how much money the bank would earn per ringgit invested.
(Atmoko, Y., Defung, F. and Tricahyadinata, I., 2018)
Net Income
=
Shareholder ' s Equity
RM 91,000
=
RM 829,500
=10.97%
 Loan-to-assets ratio

This ratio measures the total outstanding loan in relation to the total assets of the bank. This ratio
indicates the liquidity of the company and when the ratio is high, it means that the organization
has much liabilities and its overall liquidity is low. It is calculated by dividing the Debt/Assets.
Ideally, if it is 80-90% it would be profitable. (Riadi, 2018)
RM 310,000
=
RM 1,139,500
=27.20%
 Loan-to-deposits ratio

This ratio is used to measure the ability of the bank to cover the withdrawals of its customers. It
is calculated by dividing the total amount of loans by the total amount of deposits within that
fiscal year. (Riadi, 2018)
Total Loans
=
Total Deposits
RM 3,500,000
=
RM 2,800,000
=1.25
 Impaired loan ratio
According to FAS 114, an impaired loan refers to the incident where the lender is uncertain that
they will be able to collect the amount due as originally agreed in the lending contract. (Riadi,
2018)
 Amount outstanding of impaired loans
=
T otal outstanding loan portfolio
4 million
= = o.8
5 million
= 80%

 Loan impairment coverage

This ratio serves as a measure the capacity of the bank to be protected in the event of losses in
future. The bank anticipates default payments on its loans and therefore it allocates a percentage
of its loan income to cater for the anticipated losses. The higher the rate is, the stronger its
capacity is to shield from potential loan payment defaults. (Musa, M. M., & Nasieku, D. T. 2015)
(Pret ax income + Loanloss provision)
=
Net ChargesOffs
= ¿¿
=3.4

 Debt to Total Assets Ratio

This is a measure of the bank’s financial leverage. It indicates the measure of the bank’s total
assets which have been financed by creditors. It is calculated by dividing Total Liabilities/Total
Assets. (Pinto, P., & Joseph, N. R. (2017).
RM 310,000
=
RM 1,139,500
=27.20%

 Debt-to-Equity Ratio
This ratio is used to calculate the financial leverage of the bank, measuring the amount of
shareholder’s equity and debt which have been used to finance the company’s assets. It is
calculated by dividing Total liabilities/Shareholder equity. (Rahmantio, I., Saifi, M. and
Nurlaily, F., 2018)
Net Income−Preferred Dividends
=
Weighted Average shares outstanding
310,000
=
150,000
=2.06

 Earnings per share

This is the measure of a company’s profit that is allocated to each outstanding share of its
common stock. It shows the profitability of the company and it is scaled between 1 and 99, with
a higher coefficient indicating more profitability. (Almeida R. 2019)
Net Income−Preferred Dividends
=
Weighted Average shares outstanding
91,000−9,000
=
179,500
=45.68%

References
Almeida, H., 2019. Is it time to get rid of earnings-per-share (EPS)?. Review of Corporate Finance
Studies, 8(1), pp.174-206.

Atmoko, Y., Defung, F. and Tricahyadinata, I., 2018. The effect of return on assets, debt to equity ratio,
and firm size on dividend payout ratio. PERFORMANCE , 14 (2), pp. 103-109.

Aziz, M.R.A. and Nooh, M.M.A.N., 2014. Design Analysis of CIMB Bank’s Website. Jurnal
Teknologi, 66(1).
Brunnermeier, M.K., Dong, G.N. and Palia, D., 2020. Banks’ noninterest income and systemic risk. The
Review of Corporate Finance Studies, 9(2), pp.229-255.

MUSA, M. M., & NASIEKU, D. T. 2015 EFFECTS OF CREDIT RISK MANAGEMENT ON LOAN
PERFORMANCE OF COMMERCIAL BANKS IN KENYA: A CASE OF LISTED COMMERCIAL BANKS IN
KENYA.

Pinto, P., & Joseph, N. R. (2017). Capital structure and financial performance of banks. International
Journal of Applied Business and Economic Research, 15(23), 303-312.

Pradhan, R.S. and Parajuli, P., 2017. Impact of capital adequacy and cost income ratio on performance of
Nepalese commercial banks. International Journal of Management Research, 8(1), pp.6-18.

Rahmantio, I., Saifi, M. and Nurlaily, F., 2018. Effect of Debt to Equity Ratio, Return on Equity, Return on
Assets and Company Size on Firm Value (Study of Mining Companies Listed on the Indonesia Stock
Exchange 2012- 2016). Journal of Business Administration , 57 (1), pp. 151-159.

Riadi, S., 2018, March. The effect of Third Parties Fund, Non Performing Loan, Capital Adequacy Ratio,
Loan to Deposit Ratio, Return On Assets, Net Interest Margin and Operating Expenses Operating Income
on Lending (Study in Regional Development Banks in Indonesia). In Proceedings of the International
Conference on Industrial Engineering and Operations Management Bandung, Indonesia.

Sharker, M.R., 2017. Internship Report on Financial Statement Analysis of First Security Islami Bank
Limited (Doctoral dissertation, Daffodil International University).

Suu, N.D., Luu, T.Q., Pho, K.H. and McAleer, M., 2020. Net Interest Margin of Commercial Banks in
Vietnam. Advances in Decision Sciences, 24(1), pp.1-27.