By Khairul Khalid
CIMB Group Holdings Bhd has no plans to divest its business in Thailand, according to a MIDF analyst report.
Instead, CIMB Thai will focus on right-sizing its retail banking business as it is nearing operational profits.
“CIMB has no plans to hive off its business in Thailand and intends to be more focused in terms of business operations.
“The group will be revamping its retail banking business in Thailand with the focus on right sizing the aforementioned business. We understand that its retail banking in Thailand is on the borderline in terms of operational profits,” said MIDF
According to MIDF further, provisions continue to rise for CIMB Thai in the fourth quarter of financial year 2015 (4QFY15) despite decent operating income.
“For the full FY15, CIMB Thai recorded an improved nett profit by 6.4% year-on-year to THB1.05 billion (Thai baht) which was underpinned by a contained operating expenditure (Opex) and improved pre-provision operating profit (PPOP) with a nett interest margin (NIM) compression of 10 basis points (bp),” said MIDF.
In 4QFY15, CIMB Thai recorded an increase in provisions by circa THB146 million (or +20% quarter-on-quarter) from the preceding quarter. Gross non-performing loan (NPL) ratio for CIMB Thai declined to 3.1% in 4QFY15 as compared to 4.3% and 3.3% as of end 3QFY15 and 4QFY14 respectively.
NPLs declined sequentially by THB2.2 billion to THB6.4 billion in 4QFY15.
“The drop was largely due to its disposal of NPLs in 4QFY15. Recall, the high NPLs for CIMB Thai were contributed by a few commodity related loans which have been reclassified as commercial banking loans as well as NPLs of auto loans,” said MIDF.
MIDF has upgraded its rating of CIMB Group from “neutral” to “trading buy”, with a target price of RM4.80.
At noon break, CIMB shares were trading at RM4, up 3 sen.
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