KUALA LUMPUR: CIMB Group Holdings Bhd's 94.8 per cent-owned subsidiary CIMB Thai Bank PCL saw its net profit decrease 68.4 per cent year-on-year (yoy) to 341.3 million Thai baht for the three months ended March 31, 2021.
This was on the back of a 64.3 per cent growth in expected credit losses, reflected by the elevated provision from economic uncertainty and potential credit migration from customers affected by Covid-19 pandemic.
On a yoy basis, CIMB Thai's operating income decreased 17.2 per cent year on year (yoy) to 3.51 billion baht in the first quarter (Q1) ended March 31, 2021 due to a drop in other income and net interest income.
Other operating income decreased by 377.1 million baht or 37.2 per cent due to drop in gains on financial instruments measured at fair value through profit or loss of 367.8 million baht.
CIMB Thai president and chief executive officer Paul Wong Chee Kin said net interest income decreased by 366.4 million baht, caused by the lower interest income on loans from the lower credit expansion.
However, Wong said net fee and service income partially offset the decline, rising 3.1 per cent yoy due to higher insurance brokerage and underwriting income.
"The bank's operating expenses fell 15.5 per cent largely due to better cost management and lower personnel cost, raising the cost-to-income ratio to 59.3 per cent in the quarter.
"Net interest margin over earning assets stood at 3.08 per cent versus 3.31 per cent in the same quarter last year due to the lower interest income on loans," he said.
As at March 31, total gross loans stood at 219.5 million baht, a decrease of 3.3 per cent from December 31, 2020.
Deposits fell 2.7 per cent to 244.7 billion baht from 251.4 billion baht on December 31, 2020.
The modified loan-to-deposit ratio dropped to 89.7 per cent from 90.3 per cent over the same period.
Gross non-performing loans (NPL) stood at 10.6 billion baht, which translates to an impaired loan ratio of 4.8 per cent compared to 4.6 per cent on December 31, 2020.
The higher NPL ratio was mainly due to the decrease in total loan outstanding balance, while the non-performing loans have not significantly changed.
"However, CIMB Thai continues to exercise high credit risk underwriting standards and risk management policies.
"The bank is continuing its focus on improving productivity and monitoring collection," said Wong.
Loan loss coverage ratio stood at 98.9 per cent as at March 31, from 93.3 per cent at the end of 2020.
Total allowance for expected credit losses stood at 9 billion baht, which is 1.9 billion baht over the central bank's reserve requirements.
Total consolidated capital funds as at March 31 stood at 53.1 billion baht.