- CIMB Group Holdings Bhd’s (CIMB) 93.15%-owned subsidiary CIMB Thai Bank plc (CIMB Thai) registered a strong 81% QoQ increase in net earnings to THB417mil in 3QFY13, from THB231mil in 2QFY13, due mainly to operational improvement. Net earnings were in line with our estimates. We estimate that CIMB Thai has contributed 3.7% to the net earnings of CIMB Group in 3QFY13 based on our FY13 forecasts (2QFY13: 2.2%).

- Annualised loans growth was robust, estimated at 23.5% with a higher QoQ growth of 7.9% in 3QFY13 compared to 5.6% QoQ in 2QFY13. Growth was mainly driven by the retail segment. Deposit growth was also stronger in 3QFY13 at 10.6% QoQ (2QFY13: 2.1%). LDR was relatively stable at 104.6% in 3QFY13 compared to 103.3% in 2QFY13.

- We estimate 3QFY13’s NIM to be at 3.21%, which is stable compared to 3.22% in 2QFY13. Given the stable NIM and strong loans growth, net interest income grew by 7.3% QoQ and 29.1% YoY in 3QFY13.

- Non-interest income did well in 3QFY13, boosted mainly by fees and services income which grew by 15.7% QoQ and 44.5% YoY. This was attributed to improvement in arrangement fees. This helped to raise overall fee income ratio to 28.0% in 3QFY13 (2QFY13: 24.0%).

- Gross non-performing loan (NPL) was stable at THB4.4bil in 3QFY13 compared to THB4.3bil in 2QFY13. Gross NPL ratio came in better at 2.5% in 3QFY13 (2QFY13: 2.8%), given the higher loan base. The company said the improved asset quality is reflective of CIMB Thai group’s stringent credit risk assessment, effective risk management policies, improvement in loan collection processes, and the continuous management of the bank’s NPLS.

- The company reported a higher loan loss provision despite the stable NPL, at THB353mil in 3QFY13 vs. THB276mil in 2QFY13. This translates into an estimated credit cost of 88bps in 3QFY13, higher than 2QFY13’s 73bps (1QFY13: 59bps). The higher provisioning is likely due to ongoing efforts to sustain loan loss cover, which was maintained at 83.2% in 

Source: AmeSecurities