CIMB: Financial Group Achieves Expected 9MFY25 Results Driven by Operating Income Growth and Cost Discipline

CIMB Group Holdings Berhad reported a net profit of RM5,940 million for the first nine months of its fiscal year 2025 (9MFY25), marking a marginal year-on-year increase of 0.2%. The results were in line with analysts’ expectations, reaching 74% of the full-year forecast, with an annualised Return on Equity (ROE) of 11.3%, falling within the guidance range of 11.0-11.5% for the banking group.

Performance Review

CIMB’s positive performance was primarily driven by a 0.4% year-on-year expansion in operating income. This was underpinned by a robust 3.4% rise in non-interest income (non-NII), attributed to higher trading income, increased fees, and improved non-performing loan (NPL) recoveries. Quarter-on-quarter, non-NII surged by 20.3% due to strong trading activities and higher NPL sales.

Despite these gains, CIMB’s net interest income (NII) experienced a 1.5% year-on-year decline to RM8.4 billion, largely due to Net Interest Margin (NIM) contraction across key regional markets. The Group’s NIM slipped by 8 basis points (bps) year-on-year, with declines observed in Thailand, Indonesia, and Singapore, while NIM in Malaysia remained steady at 1.78%.

Loan growth remained strong in CIMB’s consumer banking (+3.7% YoY) and commercial banking (+4.2% YoY). However, wholesale banking saw a modest 0.7% year-on-year decline in gross loans. Total deposits for the Group expanded by 9.1% year-on-year on a constant currency basis, with a notable 13.9% year-on-year improvement in CASA balances, bringing the CASA ratio to 44.1%.

Operating expenses expanded, driven by higher marketing expenses (+37.0% YoY), administrative & general costs (+3.0% YoY), and personnel costs (+1.9% YoY). However, these increases were partially offset by a reduction in establishment (-9.5% YoY) and technology (-2.1% YoY) costs. Consequently, CIMB’s cost-to-income (CTI) ratio widened to 46.5% compared to 45.9% in 9MFY24.

Provisions for 9MFY25 eased to RM1,046 million, down from RM1,145 million in 9MFY24. This improvement was a result of increased recoveries and write-offs, alongside lower provisions in the non-retail segment. The gross impaired loans (GIL) ratio improved to 1.9% (from 2.3% in 3QFY24), and allowance coverage marginally climbed to 102.8%.

Capital Position and Shareholder Returns

CIMB maintains a strong capital position, with a Common Equity Tier I (CETI) Capital Ratio of 14.8% and a Total Capital Ratio of 18.8%. Leveraging its healthy capital base, CIMB announced a major capital return programme, aiming to return up to RM2 billion to shareholders by end-2027 through special dividends and/or share buybacks. As part of this, a special dividend of up to RM760.2 million, or 7.0 sen per share, is scheduled for payment on December 24, 2025.

Future Outlook

CIMB’s management remains on track to achieve its FY25 guidance, with 9M performance aligning with expectations. While consumer and commercial loan growth is expected to remain solid, overall gross loans may continue to be dampened by currency headwinds. The Group’s NIM is projected to stabilise quarter-on-quarter in 4Q, with improvements in Malaysia’s NIM anticipated due to deposit repricing and a slowdown in regional rate cuts. Operating expenses are expected to remain well-controlled, and asset quality is projected to stay strong, with loan loss charges within the guided range of 25-35 bps for FY25.

Strategic initiatives for CIMB include the launch of new digital platforms like OctoBiz for non-retail customers and SME FlexiCash-I, an AI-based lending product for SMEs. These initiatives, along with strategic partnerships, are expected to bolster business banking momentum.

Investment Recommendation

TA SECURITIES maintains its “BUY” recommendation for CIMB Group Holdings Berhad, with a target price (TP) of RM8.45. This valuation is based on an implied Price-to-Book Value (PBV) of approximately 1.19x, derived from the Gordon Growth Model and incorporating a 3% ESG premium.