CIMB reaps benefits from de-risking, cost optimisation initiatives

Net interest margin compression will be offset by improved profits and stable capital.

CIMB Group’s problem loan ratio will stabilize to 3% over the next 12-18 months, supported by derisking initiatives implemented since 2019, according to a ratings commentary by Moody’s Investors Service.

The ratings agency noted improvements in CIMB Group’s capitalization, asset quality and profitability.

Common equity Tier 1 capital ratio is expected to remain stable at around 14%. CIMB Group has reportedly been strengthening its capitalization through its dividend reinvestment scheme and risk-weighted asset (RWA) optimization. I

Improvement in profitability also contributed to the capital build-up, Moody’s said. Return on average assets to remain stable at 1% through 2024 as CIMB reaps benefits from earlier cost optimization and de-risking efforts, as well as the partial divestments of non-core businesses. 

Coupled with the absence of a one-off tax imposed by the government of Malaysia in 2022, these are expected to offset a compression in the group’s net interest margin amidst deposit competition in Malaysia and Singapore.

ALSO READ: Deposit war squeezes Malaysian banks’ margins

“CIMB Group's funding will remain well-supported by its strong domestic franchise. The banking group will also maintain ample liquidity to meet its deposit and other obligations. Liquidity coverage ratios at both the group and subsidiary levels are all well above the 100% regulatory requirement,” Moody’s wrote in the ratings commentary.