KUALA LUMPUR (July 17): CIMB Thai Bank PCL, which is 94.83%-owned by CIMB Group Holdings Bhd, saw its net profit for the six months ended June 30, 2019 (6MFY19) rose 19.4% year-on-year (y-o-y) to 429.9 million baht (about RM57.24 million), on the back of a 1.2% growth in operating income and a 31% decline in provisions, partially offset by a 16.9% increase in operating expenses.

In a statement today, CIMB Thai acting president and chief executive officer Adisorn Sermchaiwong said that on a y-o-y basis, operating income rose by 80.5 million baht or 1.2% to 6.88 billion baht from a 3.8% increase in net interest income, on the back of loan expansion and higher interest income on investments, partially offset by a 40.7 million baht or 4.1% lower net fee and service income.

He said other operating income decreased by 77.5 million baht or 13.5% from higher losses on financial instruments designated at fair value through profit or loss.

Sermchaiwong said operating expenses rose by 653.3 million baht or 16.9% largely due to higher personnel cost attributed to a combination of the Fast Forward expansion strategy, and higher compensation for employees who have retired or have over 20 years of service due to an amendment to the Labour Protection Law.

"Coupled with a higher loss on sale of properties for sale, the cost to income ratio was higher at 65.8% in 6MFY19 compared to 57% in 6MFY18," he said.

Meanwhile, net interest margin (NIM) over earning assets stood at 3.3% in 6MFY19, compared to 3.87% in 6MFY18, owing to higher cost of funds.

CIMB Thai said as at June 30, 2019, total gross loans (inclusive of loans guaranteed by other banks and loans to financial institutions) stood at 237.3 billion baht, an increase of 4.2% from Dec 31, 2018.

It said deposits (inclusive of bills of exchange, debentures and selected structured deposit products) stood at 235.3 billion baht, a slight increase of 0.4% from 234.3 billion baht as at end of December 2018.

The bank said the modified loan to deposit ratio rose to 100.9% compared to 97.2% as at Dec 31, 2018.

CIMB Thai said the gross non-performing loans (NPL) stood at 10.7 billion baht, with an equivalent gross NPL ratio of 4.5% from 4.3% as at Dec 31, 2018, arising from the slower repayment ability from a few corporate and retail accounts.

"CIMB Thai continues to exercise high standards for credit risk underwriting and risk management policies.

"The bank also focuses on improving productivity, monitoring collection and managing all accounts closely and effectively," said Sermchaiwong.

At the midday break on Bursa Malaysia today, CIMB Group shed 0.39% or 2 sen to RM5.14 for a market capitalisation of RM49.99 billion.