CIMB Thai 1Q net profit plunges 63% on higher provision, non-performing loans

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KUALA LUMPUR (April 20): CIMB Group Holdings Bhd's 93.7%-owned subsidiary, CIMB Thai Bank PCL posted a net profit of 121.2 million baht for the first quarter ended March 31, 2017 (1QFY17), a year-on-year (y-o-y) decrease of 63% or 206.1 million baht.

According to a Bursa Malaysia filing today, the lower profit was mainly from a 7% y-o-y increase in provisions, due to higher y-o-y non-performing loans (NPL) during the period.

Meanwhile, the pre-provision operating profit decreased by 11.3% y-o-y to 1.38 billion baht, mainly due to lower operating income, offset by a 0.5% y-o-y decrease in operating expenses.

"The gross NPL stood at 11.2 billion baht, with an equivalent gross NPL ratio of 5.3% from 6.1% as at Dec 31, 2016.

"The lower NPL ratio was mainly due to the sale of some NPL in 1QFY17, more efficient risk management policies, continued resolution of the Bank's NPL and improvements in loan collection processes," it said.

CIMB Thai president and chief executive officer Kittiphun Anutarasoti said according to the unaudited financial results for 1QFY17, CIMB Thai Group's consolidated operating income decreased by 184.7 million baht or 5.6% y-o-y to 3.13 billion baht.

"The lower operating income was attributed to a 59.3% or 349.4 million baht drop in other income due to slower treasury business activity and the absence of gains from sales of available-for-sale securities, partially moderated by higher other operating income.

"However, it is offset by 72.3 million baht or 3% growth in net interest income from better funding cost management and a 27.6% expansion in net fee and service income," he said in a statement today.

Its net fee and service income increased by 92.4 million baht or 27.6%, arising from higher fees from debt capital market, hire-purchase and financial lease and mutual fund.

As at March 31, CIMB Thai's total gross loans stood at 200.6 billion baht, a 2.8% decrease from Dec 31, 2016.

The group's deposits stood at 217.3 billion baht, a decrease of 2.8% from 223.5 billion baht on Dec 31, 2016. As a result, the modified loan to deposit ratio is marginally lower at 92.3% compared to 92.4% as at Dec 31, 2016.

Adhering to a more conservative reserve policy, CIMB Thai's loan loss ratio increased to 81.2% as at March 31 from 77.3% on Dec 31, 2016.

As at March 31, the group's total provisions stood at 9 billion baht, translating to a 3.4 billion baht excess over the Bank of Thailand's reserve requirements.

The group's total consolidated capital funds stood at 37.9 billion baht. The BIS ratio stood at 16.7%, of which 11.1% comprised Tier-1-capital.

At 2.48pm, CIMB Group shares rose 2 sen to RM5.50, with 4.89 million shares traded.