CIMB Thai posts net loss for 2016, plans rights issue

PETALING JAYA: CIMB Group Holdings Bhd’s CIMB Thai, which posted a net loss of 629.5 million baht (RM79.11 million) for 2016, has proposed a rights issue exercise to raise up to 5.5 billion baht.
In a filing with the stock exchange, CIMB said the fundraising exercise is to reinforce its capital position and balance sheet to support business growth. It will be undertaken at a ratio of two rights shares for every nine existing CIMB Thai shares held.
CIMB Thai swung to the red, registering a net loss of 629.5 million baht for 2016 compared with a net profit of 1.05 billion baht (RM132 million) in 2015, due to a 66.6% increase in provisions arising mainly from higher non-performing loans in certain industries.
Nonetheless, CIMB Group CEO Tengku Datuk Seri Zafrul Tengku Abdul Aziz is confident that CIMB Thai will return to profitability in 2017 on the back of a gradual pace of economic recovery in Thailand.
CIMB Thai’s net interest margin over earning assets stood at 3.77% in 2016, higher than the 3.27% achieved in 2015, as a result of more efficient funding cost management.
As at Dec 31, 2016, CIMB Thai’s total gross loans (inclusive of loans guaranteed by other banks and loans to financial institutions) stood at 206.4 billion baht, an increase of 3.7% from a year ago.
Its gross non-performing loans stood at 12.7 billion baht, with an equivalent gross non-performing loans ratio of 6.1%. This is an increase from 3.1% as at Dec 31, 2015, due to slower repayment ability from borrowers in certain sizeable corporate accounts.