CIMB Thai’s 1Q earnings down 22%

CIMB Thai Bank PCL net profit for the first quarter ended March 31, 2023 (1Q23) fell 21.8% to 830.1 million baht from 1.06 billion baht a year ago.

The 94.83%-unit of CIMB Group Holdings Bhd said the fall in earnings was due to higher operating expenses, coupled with a 128% increase in expected credit loss (ECL).

“The increase in ECL was a prudent approach, in line with prevailing economic circumstances,” CIMB Thai president and CEO Paul Wong Chee Kin said in a statement today.

CIMB Thai’s consolidated operating income in 1Q23 however rose 9.9% to 3.83 billion bhat from the same quarter in 2022.

“This was mainly contributed by a 1.5% growth in net interest income and a 46.5% growth in other income, offset by a 15.0% decline in net fee and service income,” said Wong. 

On a y-o-y basis, CIMB Thai’s net interest income increased 1.5%, mainly driven by loan expansion.

Other operating income increased 46.5%, mainly from higher gains on investments and sale of non-performing loans.

This, it said, was partially offset by lower net fee and service income of 57.7 million baht, representing a 15% decline, mainly due to lower fee income from insurance brokerage and underwriting income.

Operating expenses, meanwhile, increased 9.6%, mainly from higher impairment loss on the sale of properties.

For the quarter under review, CIMB Thai’s cost-to-income ratio improved to 51.2% compared to 51.4% a year ago as a result of stronger operating income growth compared to operating expenses.

Net interest margin (NIM) over earning assets stood at 2.6% in Q123, compared to 2.8% previously, as a result of the higher cost of funds.

The bank’s ratio of non-performing loans (NPLs) declined to 3.1% compared to 3.3% as at end-2022, due to portfolio reshaping in line with the wind down of commercial banking.

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

As at 1Q23, gross loans stood at 237.4 billion baht, an increase of 0.9% from end-2022, while deposits were down 7.6% to 267.9 billion baht from 289.7 billion baht previously.

CIMB Group shares were down 3 sen or 0.58% at RM5.16, giving the group a market capitalisation of RM55.03 billion. — TMR / pic BLOOMBERG