KUALA LUMPUR (Feb 28): CIMB Group Holdings Bhd (KL:CIMB), Malaysia’s second largest bank, aims to achieve a return on equity (ROE) of 11%-11.5% in 2025, with a dividend payout target of 55%.

For the financial year ending Dec 31, 2025 (FY2025), the financial group foresees challenges in net interest margin (NIM) because interest rates in its key markets — Indonesia and Thailand — are on a declining trend. However, these challenges are expected to be offset by loan growth, group chief executive officer Novan Amirudin told the media briefing in conjunction with the release of its quarterly earnings.

CIMB, whose net profit exceeded RM7 billion in FY2024 for the first time, is targeting a 5%-7% loan growth, with expectation of a 5%-7% growth in Indonesia and a 5%-6% growth in Malaysia.

“We're going to leverage on our strong client franchise, as evidenced from our performance this year, our disciplined asset pricing, and we're staying the course on our deposit-led strategy,” Novan explained.

Overall, CIMB believes that Asean will remain resilient and benefit from the bifurcation caused by the US trade policy.

Nevertheless, the banking group expects its credit cost to normalise upwards to 30 to 40 basis points in FY2025 from 25 basis points last year. This as it has benefitted from some write-backs in certain markets in 2024, with normalisation anticipated this year.

To recap, CIMB was hit hard in 2020 and decided to reshape its portfolio. The banking group shut down its commercial banking operations in Thailand and downsized its portfolio in Singapore and Indonesia. It also beefed up efforts to improve credit management.

“We've turned it around, and we're now growing it back responsibly in areas that we know how to underwrite,” Novan noted.

The banking group expects its cost-income ratio to remain at the current level of 46.7%, as it continues to invest in technology and resilience.

CIMB’s non-interest income (NOII) grew by 8.1% in FY2024, pushing its NOII as a percentage of total income to 31% from 30.4% a year ago. The group also disclosed separate lines where its treasury client sales increased by 17.4% and fees rose by 4.2%.

"We provide the whole suite of services to our clients and treasury client sales if operated this way can grow,” explained Novan. He gave examples of franchise customers needing foreign exchange solutions as their cross-border needs grow, and hedging solutions when outlook becomes uncertain.

Overall, he expects treasury client sales to grow without divulging any specific metrics.

CIMB’s shares fell 41 sen or 5% to a six-month low of RM7.81 on Friday, giving the bank a market capitalisation of RM83.82 billion. The banking stock is valued at 1.25 times its book value of RM6.45 per share.

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