KUALA LUMPUR: CIMB Thai Bank PCL reported lower net profit of 954.80mil baht (RM123.24mil) in the first half ended June 30, 2021 due to higher provisions set aside due to the Covid-19 pandemic.

       Its net profit decreased by 431.10mil or 31.1% year-on-year (YoY) to 954.80mil baht, mainly from the 19.1% YoY increase in expected credit losses, reflected by the elevated provisions from economic uncertainty and credit migration from customers affected by the pandemic.

       CIMB Thai said in the first half, its net fee and service income increased by 61.6mil baht (+8.9% YoY), arising from higher insurance brokerage and underwriting income.

       Net interest income decreased by 672.5mil baht (-11.7% YoY), caused by the lower interest income on loans and hire purchase business from the lower credit expansion.

       Operating expenses decreased by 579.9mil baht (-12.3% YoY), largely due to better cost management and better optimisation of resources.

       CIMB Thai Bank president and CEO Paul Wong Chee Kin said consolidated operating income decreased by 8.1% YoY to 7.28bil baht.

       “The lower operating income was attributed to a 11.7% drop in net interest income and 2.3% decrease in other income, offset by a 8.9% expansion in net fee and service income.

       “Pre-provision operating profit decreased by 64.3mil baht or 2.0% YoY to 3.15bil baht, mainly due to lower operating income, offset by a 12.3% YoY decrease in operating expenses,” he explained.

       On a YoY basis, net fee and service income increased by 61.6mil baht or 8.9%, arising from higher insurance brokerage and underwriting income.

       Net interest income decreased by 11.7%, caused by the lower interest income on loans and hire purchase business from the lower credit expansion.

       Other operating income decreased by 33.4mil baht or 2.3% due to the drop in gains on financial instruments measured at fair value through profit or loss.

       CIMB Thai’s net interest margin (NIM) over earning assets stood at 3.2% in the first half, compared with 3.3% in 6M2020, resulting from lower interest income on loans and hire purchase business.

       The modified loan-to-deposit ratio decreased to 89.6% from 90.3% as at Dec 31, 2020.

       The gross non-performing loans (NPL) stood at 10.6bil baht, translating to an impaired loan ratio of 4.8% compared to 4.6% as at Dec 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,” he said.