CIMB Thai’s net profit declines 63% in 1Q17

Izzat RatnaFriday, April 21, 2017

CIMB Thai Bank plc, a 93.71% indirectly held subsidiary of CIMB Group Holdings Bhd saw a 63% decrease in year-on-year (YoY) net profit for the first-quarter of 2017 (1Q17) to RM15.51 million from RM26.39 million. 

The decline in net profit was due to a 7% YoY increase in provisions, attributed to higher non-performing loans (NPLs) during the period. 

CIMB Thai president and CEO Kittiphun Anutarasoti said the unaudited financial results for the three months ended March 31, 2017, consolidated operating income decreased by RM23.65 million or 5.6% YoY to RM400.76 million. 

“The lower operating income was attributed to a 59.3% drop in other incomes, offset by a 3% growth in net interest income and 27.6% expansion in net fee and service income,” he said in a statement yesterday. 

Pre-provision operating profit also fell by 11.3% YoY to RM177 million, mainly due to lower operating income, offset by 0.5% YoY decrease in operating expenses. 

As at March 31, 2017, total gross loans (inclusive of loans guaranteed by other banks and financial institutions) stood at RM25.68 billion, a 2.8% decrease from Dec 31, 2016. 

Deposits (inclusive of bill of exchanges, debentures and selected structured deposit products) stood at RM27.83 billion, a decrease of 2.8% from RM28.61 billion as at end of December 2016.

The modified loan-to-deposit ratio was slightly lower at 92.3% compared to 92.4% during the same period. 

Gross NPL stood at RM1.43 billion, with an equivalent gross NPL ratio of 5.3% from 6.1% due to the sale of some NPLs in 1Q17, as well as more efficient risk management policies, continued resolution of the bank’s NPLs and improvements in loan collection processes. 

CIMB Thai’s loan-loss coverage ratio increased to 81.2% as at March 31, 2017, from 77.3% as at the end of Dec 31, 2016, adhering to a more conservative reserve policy. 

As at March 31, 2017, total provisions stood at RM1.15 billion, translating to a RM435 million excess over the Bank of Thailand’s reserve requirements. 

Total consolidated capital funds stood at RM4.85 billion, while the bank for international settlement ratio stood at 16.7%, of which 11.1% comprised Tier-1 capital. 

Meanwhile, on a YoY basis, net fee and service income increased by RM11.83 million or 27.6%, arising from higher fees from debt capital market, hire purchase and financial lease and mutual fund. 

Net interest income increased by RM9.25 million or 3%, from better funding cost management. 

The cost-to-income ratio increased to 55.8% in 1Q17 compared to 53% in 1Q16, as a result of the lower operating income. 


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