KUALA LUMPUR (April 21): CIMB Group Holdings Bhd's 94.83%-owned subsidiary CIMB Thai Bank PCL saw its net profit jump 719.7 million baht or 211% year-on-year (y-o-y) for the three months ended March 31, 2022 (3MFY22) to 1.06 billion baht.

The improvement came mainly due to a better cost control, with a 14% drop in operating expenses and a 64% decline in expected credit losses, CIMB Thai said in a statement. This improved the cost-to-income ratio to 51.4% in 3MFY22 compared with 59.3% in 3MFY21.

This came despite a marginal drop of 0.8% in operating income to 3.48 billion baht from 3.51 million baht a year earlier, due to a 152.9 million baht or 6.2% drop in net interest income because of lower interest income on loans and hire purchase business, as well as a drop in net fee and service income from higher fee and service expenses. This crimped the bank's net interest margin over earning assets to 2.8% in 3MFY22 from 3.1% in 3MFY21.

The decline was partially offset by an increase in other operating income by 153.1 million baht or 24.1% due to an increase in gains on financial instruments measured at fair value through profit or loss, and other income, according to CIMB Thai's president and chief executive officer Paul Wong Chee Kin.

But CIMB Thai Group made considerable progress in its overall performance despite the uncertain recovery surrounding the Covid-19 pandemic, driven by the group's cost discipline and improved asset quality, Wong said.

"We also saw positive growth momentum in 1Q22. CIMB Thai's 2022 strategy is to remain focused on driving sustainable financial solutions and personalised services through its key business drivers — consumer banking, wholesale banking and treasury and markets, while leveraging its ASEAN network and digital platforms," Wong added.

As at March 31, 2022, CIMB Thai Group's total gross loans — inclusive of loans guaranteed by other banks and loans to financial institutions — stood at 215 billion baht, up 1.5% from Dec 31, 2021.

"Deposits (inclusive of bills of exchange, debentures and selected structured deposit products) stood at 252.5 billion baht, an increase of 5.4% from 239.5 billion baht as at end of December 2021. The modified loan-to-deposit ratio decreased to 85.2% from 88.5 % as at Dec 31, 2021.

"The gross non-performing loans (NPLs) stood at 8.4 billion baht, with a higher gross NPL ratio of 3.8% from 3.7% as at Dec 31, 2021 due to the sale of NPLs in 2021. CIMB Thai continues to exercise high credit risk underwriting standards and risk management policies. The bank will also continue to focus on improving productivity, monitoring collection and managing all accounts closely and effectively," Wong said.

Meanwhile, CIMB Thai Group's loan loss coverage ratio as at March 31, 2022 grew to 112% from 117.5% at the end of December 2021, while total allowance for expected credit losses stood at 8.6 billion baht, 1.5 billion baht over the Bank of Thailand's reserve requirements.

The bank's total consolidated capital funds as at March 31, 2022 stood at 53.6 billion baht. Its BIS ratio stood at 21.9%, of which 15.9% comprised Tier-1-capital.

At the time of writing on Thursday (April 21), CIMB shares were up 10 sen or 1.96% to RM5.19, giving the bank a market capitalisation of RM53.05 billion.