This article first appeared in The Edge Financial Daily, on April 22, 2016.

KUALA LUMPUR: CIMB Thai Bank PCL, a 93.71%-indirect subsidiary of CIMB Group Holdings Bhd, posted a consolidated net profit of 327.3 million baht (RM36.17 million) for the first quarter ended March 31, 2016 (1QFY16), an increase of 150.6% compared with 1QFY15.

CIMB Group said the higher profit was largely due to a growth in net interest income and a decrease in operating expenses. This was, however, partially offset by lower net fee, service income and other operating income.

Meanwhile, its provisions increased by 12.6% year-on-year (y-o-y) due to the group’s cautious stance amid volatile economic environment, it said in a filing with Bursa Malaysia.

It said CIMB Thai’s consolidated operating income increased by 11.8% to 3.32 billion baht.

CIMB Thai’s president and chief executive officer Subhak Siwaraksa said in a statement that the higher operating income was underpinned by higher net interest income of 476 million baht, a rise of 24.9% y-o-y, arising from a growth of loans and lower interest expenses.

Its net fee and service income decreased by 18.3%, a result of lower debt capital market and insurance fees.

As at March 31, CIMB Thai’s total gross loans stood at 200.4 billion baht, an increase of 0.7% from Dec 31, 2015.

The group’s deposits stood at 205.8 billion baht, a decrease of 5.7% from 218.4 billion baht at Dec 31, 2015. As a result, the modified loan-to-deposit ratio increased to 97.4% from 91.1%.

Gross non-performing loans (NPL) stood at 6.2 billion baht, with a gross NPL ratio of 3%, a decrease from 3.1% as at Dec 31, 2015.

“The reduction in NPL was mainly due to more stringent credit risk assessments, effective risk management policies, improvements in loan collection processes and better management,” it said.

Adhering to a more conservative reserve policy, CIMB Thai’s loan loss coverage ratio increased to 115% as at March 31, from 106.5% at Dec 31, 2015.

As at 31 March, the group’s total provisions stood at 7.1 billion baht, showing an excess of 3.3 billion baht over Bank of Thailand’s reserve requirements.

The group’s total consolidated capital funds stood at 34.6 billion baht. The Bank of International Settlements ratio was 15%, of which 10.8% comprises Tier-1 capital.