CIMB Thai's 1Q net profit jumps 151% on higher net interest income, lower operating expenses

by **Cals** Fri 22 Apr 2016, 04:39

CIMB Thai's 1Q net profit jumps 151% on higher net interest income, lower operating expenses

By Tan Siew Mung / theedgemarkets.com | April 21, 2016 : 3:21 PM MYT

KUALA LUMPUR (April 21): 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 to 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 today.

It said CIMB Thai's consolidated operating income increased by 11.8% to 3.32 billion baht (RM336 million).

CIMB Thai 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 (RM52.65 million), an increase of 24.9% y-o-y, arising from a growth in 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.

Other operating income decreased by 7.8% due to lower contributions from treasury and markets, partially moderated by higher gains on investment and other operating income.

Operating expenses decreased by 1.5%, mainly from expenses relating to staff, premises and equipment as well as other operating expenses.

The cost to income ratio decreased to 53% compared to 60.1% a year ago, due to better cost management and increased income.

Net interest margin (NIM) over earning assets stood at 3.72 compared to 2.95% in the previous year on the back of more efficient management of funding.

As at March 31, CIMB Thai's total gross loans stood at 200.4 billion baht (RM22.14 billion), an increase of 0.7% from Dec 31, 2015.

The group's deposits stood at 205.8 billion baht (RM22.74 billion), a decrease of 5.7% from 218.4 billion baht (RM24.13 billion) on 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 (RM685.1 million), 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% on Dec 31, 2015.

As at March 31, the group's total provisions stood at 7.1 billion baht (RM784.6 million), showing an excess of 3.3 billion baht (RM364.7 million) over Bank of Thailand's reserve requirements.

The group's total consolidated capital funds stood at 34.6 billion baht (RM3.82 billion). The BIS ratio was 15%, of which 10.8% comprises Tier-1-capital.

At 2.30pm, CIMB Group Bhd rose three sen to RM4.90, with 4.12 million shares traded.