KUALA LUMPUR, July 21 — CIMB Group Holdings Bhd’s 94.83 per cent indirectly held subsidiary CIMB Thai Bank PCL posted a net profit of 1.369 billion Thai baht for the first six months of 2023 (1H 2023), a decrease by 35.3 per cent year-on-year (y-o-y).

This was due to higher operating expenses and a 94.2 per cent increase in expected credit loss.

However, CIMB Thai’s consolidated operating income rose by 51 million baht or 0.7 per cent y-o-y to 7.16 billion baht from 1H 2022 mainly contributed by a 4.6 per cent growth in net interest income and a 1.3 per cent growth in other income, which was partially offset by a 21.7 per cent decline in net fee and service income.

In a filing with Bursa Malaysia today, CIMB Thai president and chief executive officer Paul Wong Chee Kin noted that pre-provision operating profit contracted 7.3 per cent y-o-y to 3.106 billion baht as the 0.7 per cent growth in operating income was offset by the 7.9 per cent rise in operating expenses.

"Net profit was 746.6 million baht y-o-y lower at 1.367 billion baht from higher operating expenses coupled with a 94.2 per cent increase in expected credit loss (ECL). The higher ECL was in line with the bank’s prudent approach in view of the prevailing economic environment,” he said.

He also noted that the bank’s net interest margin (NIM) over earning assets stood at 2.7 per cent in 1H 2023, compared to 2.8 per cent in 1H 2022, as a result of higher cost of funds.

As at June 30, 2023, total gross loans inclusive of loans guaranteed by other banks and loans to financial institutions stood at 242.9 billion baht, an increase of 3.2 per cent from Dec 31, 2022, he said.

Deposits inclusive of bills of exchange, debentures and selected structured deposit products stood at 289.7 billion baht, which was flat compared to end-December 2022 while the modified loan to deposit ratio increased to 83.8 per cent from 81.2 per cent as at Dec 31, 2022, he noted.

As for the bank’s gross non-performing loans (NPL), he said it stood at 7.7 billion baht, with a lower gross NPL ratio of 3.1 per cent from 3.3 per cent as at Dec 31, 2022, in line with the portfolio reshaping efforts to exit commercial banking.

"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,” he said.

As at June 30, 2023, he said CIMB Thai loan loss coverage ratio stood at 122.1 per cent, from 114.6 per cent at the end of December 2022 while total allowance for expected credit losses stood at 8.7 billion baht, 1.5 billion baht over the Bank of Thailand’s reserve requirements.

He added that total consolidated capital funds as at June 30, 2023 stood at 58.1 billion baht whereby the Bank for International Settlements ratio stood at 21.2 per cent, of which 15.7 per cent comprised Tier-1-capital. — Bernama