Report ID 6035 Popularity 501 views 50 downloads 
Report Date Nov 2019 Product  
Company / Issuer CIMB Bank Bhd Sector Finance - Financial Institution
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MARC has affirmed its financial institution (FI) ratings on CIMB Bank Berhad at AAA/MARC-1 with a stable outlook. Concurrently, its ratings on the bank’s existing subordinated debt programmes have been affirmed with a stable outlook. These ratings have been notched down from the bank’s long-term FI rating based on their relative loss severity risk profiles. The subordinated debt programmes are as follows:

  1. RM10.0 billion Basel III-compliant Tier 2 Subordinated Debt Programme affirmed at AA+; and
  2. RM5.0 billion Subordinated Debt and Junior Sukuk Programmes affirmed at AA+/AA+IS

The affirmed FI ratings are driven by CIMB Bank’s high systemic importance in the domestic banking industry as the third-largest bank by asset size, its well-established banking franchise and strong domestic market position. CIMB Bank accounted for 12.3% and 16.7% of total loans and deposits in the domestic banking industry as at end-June 2019. It has a sizeable network of 234 domestic branches and has a sizeable presence in the ASEAN region. Consolidated gross loans stood at RM297.7 billion as at end-June 2019, with domestic loans continuing to make up the bulk of the total (71.3%), followed by Thailand (12.0%) and Singapore (9.4%).

For 1H2019, consolidated loans grew by 7.3% y-o-y with the domestic market remaining the main growth driver, at 7.2% y-o-y. Its Thai banking subsidiary grew by 19.7% y-o-y while its Singapore operations recorded a 0.1% contraction. Domestic loan growth continues to be driven by its Islamic banking subsidiary and has been above the industry average for the past two years, which suggests that the bank would be more susceptible to any seasoning impact going forward.

Gross impaired loans (GIL) ratio weakened to 2.55% during 1H2019 (2018: 2.18%), with the impairments mainly arising from the domestic loan book of its Islamic banking subsidiary in which the GIL rose by about RM934.9 million. The bank expects to reverse a substantial portion of the new impairments in its Islamic banking subsidiary over the near term. In respect of its overseas operations, the asset quality of its Thai banking subsidiary, CIMB Thai Bank Public Company Limited (CIMB Thai), remained weak although the GIL ratio has declined to 5.19% as at 1H2019 (2018: 5.43%) but remained higher than the Thai banking industry average of 2.93%. The bank sold its non-performing loans in Thailand and reduced its exposure in the riskier SME segment to strengthen asset quality. In Singapore, CIMB Bank has remained cautious in lending given the still challenging conditions in key sectors such as oil and gas.

Consolidated Common Equity Tier 1 (CET1) and total capital ratios stood at 13.1% and 17.8% at end-June 2019 (2018: 12.9%; 17.8%). The bank’s capitalisation continues to benefit from the Dividend Reinvestment Scheme (DRS) policy. In 2018, RM2.3 billion was reinvested into the bank’s capital.

CIMB Bank’s pre-tax profit increased by 6.7% y-o-y to RM2.8 billion in 1H2019 on the back of strong loan and financing growth. Owing to strong loan growth, interest income grew by 3.1% y-o-y. The group’s customer deposits expanded by 11.0% y-o-y to RM328.0 billion. However, during the period, the loans-to-customer deposits ratio was relatively unchanged due to loan book expansion. Its core customer deposits-to-total funding ratio increased to 61.0% in June 2019 (2018: 59.4%), reflecting an improvement in stable funding sources. The bank’s liquidity position remained sound with its Basel III liquidity coverage ratio standing well above the minimum requirement of 100%.

Major Rating Factors


  • Well-established banking franchise in the region;
  • High systemic importance in the domestic banking system; and
  • Healthy funding profile.


  • Pressure on interest margins.