CIMB Thai’s 1H18 profit drops 24.6%

By NG MIN SHEN / Pic By TMR

Cimb Thai Bank pcl’s net profit dropped 24.6%, or 117.7 million baht year-on-year (YoY) to 360.1 million baht (RM43.77 million) in the first half of 2018 (1H18), due to higher operating expenses and provisions.

The 94.11% indirectly-held subsidiary of Malaysia’s banking giant CIMB Group Holdings Bhd, said its consolidated operating income rose 6.5%, or 412.2 million baht YoY to 6.795 billion baht from a year ago, mainly contributed by higher net interest income, net fee and service income, and other incomes.

Pre-provision operating profit fell 1.4% YoY to 2.92 billion baht, attributed to a 13.3% YoY increase in operating expenses.

“On a YoY basis, net interest income climbed by 5.2%, or 258.4 million baht, mainly driven by loan expansion and lower interest expenses. Net fee and service income increased by 10%, or 89.8 million baht, from higher mutual funds, insurance and hire- purchase fees.

“Total other operating income grew by 12.6%, or 63.9 million baht, from higher treasury income due to increased market activity,” CIMB Thai president and CEO Kittiphun Anutarasoti said in a statement yesterday.

Operating expenses climbed 13.3%, or 455 million baht YoY, largely as a result of higher personnel cost and loss on sale of properties.

This resulted in a higher cost-to-income ratio of 57% in the six months ended June 30, 2018, compared to 53.6% registered in 1H17.

Net interest margin over earning assets stood at 3.87% in 1H18, compared to 3.81% a year ago as a product of more efficient management of funding costs.

Total gross loans, inclusive of loans guaranteed by other banks and loans to financial institutions, stood at 215.2 billion baht as at end-June 2018, a 1% hike from end-December 2017.

Deposits, inclusive of bill of exchanges, debentures and selected structured deposit products, stood at 224.5 billion baht, up 2% from 220.1 billion baht achieved as at end- December last year.

Modified loan-to-deposit ratio was lower at 95.9%, against the 96.8% registered as at end-December 2017.

Gross non-performing loans (NPLs) stood at 12.6 billion baht, with a higher equivalent gross NPL ratio of 5.8% against 4.8% reported at end-2017.

“The increase was attributed to commercial banking loans in 1H18 and the sale of NPLs in 2017.

“CIMB Thai continues to exercise high credit risk underwriting standards and risk management policies. The bank also focuses on improving productivity, monitoring collection and managing all accounts closely and effectively,” Anutarasoti said.

Loan loss coverage ratio fell to 90.1% as at end-June 2018, from 93.2% recorded at the end of 2017.

As at June 30, 2018, total provisions stood at 11.3 billion baht, translating to a four billion baht excess over the Bank of Thailand’s reserve requirements.

Total consolidated capital funds as at end-June 2018 stood at 43.9 billion baht, while the BIS (Bank of International Settlement) ratio stood at 17%, of which 12% comprised Tier-1 capital.