PETALING JAYA: CIMB Thai Bank PCL’s consolidated net profit for the second quarter ended June 30, 2019 fell 45.1% to 104.93 million baht (RM13.98 million) from 191.23 million baht (RM25.48 million) a year ago on the back of lower operating income and higher operating expenses.
During the quarter, the bank’s operating income fell marginally to 3.38 billion baht from 3.41 billion baht a year ago while operating expenses for the quarter rose 25.5% to 2.44 billion baht from 1.94 billion baht a year ago.
For the six months ended June 30, 2019, the bank’s net profit rose 19.4% to 429.93 million baht from 360.12 million baht a year ago due to higher operating income and a 31% decline in provisions.
Operating income for the period rose 1.2% to 6.88 billion baht from 6.80 billion baht a year ago while operating expenses rose 16.9% to 4.53 billion baht from 3.87 billion baht a year ago.
CIMB Thai acting president and CEO Adisorn Sermchaiwong said the higher operating income was driven by a 3.8% increase in net interest income, on the back of loan expansion and higher interest income on investments.
This was partially offset by a 4.1% drop in net fee and service income. Other operating income fell 13.5% from higher losses on financial instruments designated at fair value through profit or loss.
Operating expenses rose during the period due to higher personnel cost attributed to a combination of the Fast Forward expansion strategy, and higher compensation for employees who have retired or have over 20 years of service due to an amendment to the Labour Protection Law.
Coupled with a higher loss on sale of properties for sale, the cost-to-income ratio was higher at 65.8% during the period compared with 57% a year ago.
The bank’s net interest margin over earning assets stood at 3.3% during the six months period, compared with 3.87% a year ago, due to higher cost of funds.
As at June 30, 2019, CIMB Thai’s total gross loans, inclusive of loans guaranteed by other banks and loans to financial institutions, stood at 237.3 billion baht reflecting an increase of 4.2% from Dec 31, 2018.
The modified loan-to-deposit ratio rose to 100.9% compared with 97.2% as at Dec 31, 2018.
Meanwhile, gross non-performing loans (NPL) stood at 10.7 billion baht, with an equivalent gross NPL ratio of 4.5% from 4.3% as at Dec 31, 2018, due to slower repayment ability from a few corporate and retail accounts.
“CIMB Thai continues to exercise high standards for credit risk underwriting and risk management policies. The bank also focuses on improving productivity, monitoring collection and managing all accounts closely and effectively,” said Sermchaiwong.
The bank’s loan loss coverage ratio stood at 106.5% as at June 30, 2019 compared with 107% as at Dec 31, 2018. As at June 30, 2019, total provisions stood at 11.3 billion baht, translating to a 5.2 billion baht excess over the Bank of Thailand’s reserve requirements.
Total consolidated capital funds stood at 48.4 billion baht as at June 30, 2019. BIS ratio stood at 18.7%, of which 13.7% comprised Tier-1 capital.