KUALA LUMPUR (Aug 28): CIMB Group Holdings Bhd (KL:CIMB), the country’s second-largest lender by assets, said it will see an uptick in its gross impaired loan (GIL) ratio this year if the conflict in West Asia continues to drive up costs.
As at end-June, CIMB’s asset quality remained “broadly stable”, with the GIL ratio — the percentage of loans that have become impaired or non-performing — at an all-time low of 1.6%.
“On GIL, there could be some areas that are more exposed indirectly to Middle East pressures or inflationary cost pressures, where we might see a small tick-up in terms of gross impaired loans, but the overall group number should be relatively stable,” group chief financial and strategy officer Khairul Rifaie said at a press briefing following the release of CIMB’s second-quarter financial results on Friday.
Group chief executive officer Novan Amirudin meanwhile said prolonged tensions in the Middle East, which will drive up fuel prices and operating costs, could put pressure on businesses, particularly those in the commercial segment.
“The commercial segment, where the margins are lower, typically gets impacted more than the wholesale segment,” he said.
However, Novan said CIMB is stepping up its engagement with customers and providing support to help them navigate the higher-cost environment, rather than pulling back.
“What we are doing is to stay closer to all our customers, making sure that they have all the solutions needed to basically go through the current situation. So instead of us stepping back a bit, we are actually stepping forward and focusing more on our customers. So our commercial loan approvals are up,” he said.
“The disbursements, meaning the customers drawing it down, for the time being are down compared to last year. But we see this as a timing difference, and we continue to engage our customers very closely to make sure that people get all the help that they need,” he added.
CIMB’s loan book remains largely concentrated among individuals, who accounted for RM252 billion, or about 55% of its RM458.08 billion gross loans as at end-June. This was followed by domestic business enterprises, comprising small and medium-sized enterprises and other businesses, which accounted for RM131.02 billion, or about 29% of the total.
CIMB shares closed 11 sen or 1.36% lower at RM7.96 on Friday, giving the bank a market capitalisation of RM86.04 billion.