KUALA LUMPUR (July 21): CIMB Group Holdings Bhd’s 94.8%-owned subsidiary CIMB Thai Bank PCL saw its net profit dropped 31.1% year-on-year (y-o-y) for the six-month period ended June 30, 2021 (6MFY21) to 954.8 million baht (RM123.6 million) from 1.4 billion baht in the previous year.

This was due to a 19.1% y-o-y increase in expected credit losses, reflected by the elevated provisions from economic uncertainty and credit migration from customers affected by the Covid-19 pandemic.

According to a statement to Bursa Malaysia, CIMB Thai noted that its six-month consolidated operating income fell 8.1% y-o-y to 7.28 billion baht from 7.93 billion baht, attributed by a drop in net interest income, other income offset by expansion in net fee and service income.

“On a y-o-y basis, net fee and service income increased by 61.6 million baht or 8.9%, arising from higher insurance brokerage and underwriting income.

“Net interest income decreased by 672.5 million baht or 11.7%, caused by the lower interest income on loans and hire purchase business from the lower credit expansion. Other operating income decreased by 33.4 million baht or 2.3% due to the drop in gains on financial instruments measured at fair value through profit or loss.

“Operating expenses decreased by 579.9 million baht or 12.3%, largely due to better cost management and better optimisation of resources,” the bank said.

Its cost-to-income ratio improved to 56.7% in 6MFY21 compared to 59.5% in 6MFY20.

CIMB Thai’s net interest margin (NIM) over earning assets stood at 3.2% in 6MFY21, compared to 3.3% recorded last year, due to lower interest income on loans and hire purchase business.

As at June 30, 2021, total gross loans (inclusive of loans guaranteed by other banks and loans to financial institutions) stood at 217.8 billion baht, a decrease of 4.1% from Dec 31, 2020.  

“Deposits (inclusive of bills of exchange, debentures and selected structured deposit products) stood at 242.9 billion baht, a decrease of 3.4% from 251.4 billion baht as at end of December 2020. The modified loan-to-deposit ratio decreased to 89.6% from 90.3% as at Dec 31, 2020.

“The gross non-performing loans (NPL) stood at 10.6 billion baht, translating to an impaired loan ratio of 4.8% compared to 4.6% as at Dec 31, 2020. The higher NPL ratio was mainly due to the decrease in total loan outstanding balance, while the non-performing loans have not significantly changed.

"However, CIMB Thai continues to exercise high credit risk underwriting standards and risk management policies. The bank is continuing its focus on improving productivity and monitoring collection,” it said.

CIMB Thai’s loan loss coverage ratio stood at 101.4% as at June 30, 2021 from 93.3% at the end of December 2020.

“As at June 30, 2021, total allowance for expected credit losses stood at 9.9 billion baht, 1.8 billion baht over the Bank of Thailand’s reserve requirements.

“Total consolidated capital funds as at June 30, 2021 stood at 53.4 billion baht. The BIS ratio stood at 20.6%, of which 15% comprised Tier-1-capital,” the bank added.

At 12.30pm break, CIMB Group’s shares were six sen or 1.32% lower at RM4.50, giving the group a market capitalisation of RM45.06 billion.