CIMB Thai’s Q2 earnings rise 17.9% on higher operating income

PETALING JAYA: CIMB Group Holdings Bhd’s CIMB Thai reported a 17.94% increase in net profit to 217.56 million baht (RM24.13 million) for the second quarter ended June 30, 2015 compared with 184.46 million baht (RM20.46 million) in the previous corresponding period, buoyed by higher operating income.

In a filing with the stock exchange, CIMB Thai said sixmonth operating income rose 18.4% to 6.08 billion baht, underpinned by a 5% growth in net interest income, a 28.2% expansion in net fee and service income and a 76.9% growth in other income.

Net interest income increased 5%, supported by loan expansion but partly offset by a gain from early redemption of hybrid instruments in the first months of 2014.

Net interest margin over earning assets stood at 3.05% in the six months of 2015, a drop of 0.3% from the same period last year, resulting from higher low-yielding assets and anaemic loan growth due to the slower economic environment.

As at June 30, 2015, total gross loans (inclusive of loans guaranteed by other banks and loans to financial institutions) stood at 196.6 billion baht (RM21.81 billion), marking an increase of 3% from December 31, 2014.

Gross non-performing loans (NPL) stood at 8.0 billion baht (RM887.35 million), with an equivalent gross NPL ratio of 3.9%. This is an increase from 3.3% as at Dec 31, 2014 due to slower repayment ability mainly from the few corporate accounts.

CIMB Thai’s loan loss coverage ratio decreased to 94.3% as at June 30, 2015 from 95.2% as at endDecember 2014. For the six-month period, CIMB Thai’s net profit, however, dropped 44.32% from 625.33 million baht (RM69.36 million) to 348.16 million baht (RM38.62 million), mainly attributed to a 138.5% increase in provisions amid a weaker economic environment.

On a separate note, CIMB announced that it has appointed Datuk Mohd Nasir Ahmad and Datuk Lee Kok Kwan to its board, effective yesterday. CIMB said in filings with the stock exchange that the duo have been appointed independent nonexecutive directors.

Nasir has also been appointed a member of the audit committee to replace Watanan Petersik. Nasir brings with him vast experience in finance and accounting which spans more than 35 years, where he has held key positions in private and government-linked companies.

Meanwhile, Lee, with the new appointment, relinquished with effect from yesterday all executive positions he held within the group.

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