CIMB Thai sees 2010 turnaround

Published: 2009/07/29

BANGKOK: CIMB Thai Bank, 94 per cent owned by Malaysia’s CIMB, hopes its recent restructuring and an expected recovery in Thailand’s economy will help it return to net profit next year, earlier than expected. In 2008 it posted a net loss of nearly 2.0 billion baht, making it three consecutive annual losses.

It also made a net loss of 502 million baht in the first six months of 2009. “A return to net profit this year, that’s hard to predict,” President Subhak Siwaraksa said. “Even though we are already showing operating profits, the key variable is provisioning charges, which depend on economic conditions.”

“But we will surely make a net profit next year, after spending all this year on cleaning up the bank, ... things like controlling asset quality,” he said.

CIMB has previously said its Thai unit, the country’s eleventh-largest lender by assets, was unlikely to show a net profit in the next two or three year because of the global economic slump and the investment needed to revamp it. CIMB Thai, formerly BankThai, maintained its aim of expanding lending by 15 per cent this year, adding 12 billion baht (US$353 million) in loans, even though lending shrank 9.6 per cent in the first six months, Subhak said.

“The target isn’t easy to meet, but it’s possible,” he said. “So far this year, we have been busy with restructuring, but now we are ready to run the business fully from the third quarter.” “We see opportunities in exports, the construction sector, and property,” he added.

The bank, which has 150 billion baht in assets and 74 billion in loans, completed its restructuring in early July. CIMB, controlled by Bumiputra-Commerce Holdings, bought a stake in BankThai from a Thai central bank unit in 2008 and completed its acquisition in the first quarter of 2009. CIMB Thai operates 147 branches and runs a securities firm, an asset management company and a non-life insurance firm.

The bank set aside loan-loss provisions of 600-700 million baht in the first six months, Subhak said, adding it planned to reduce its non-performing loans to below 8 per cent of total lending from 9.79 per cent at the end of June.

Last week, the Bank of Thailand forecast the economy would shrink 3.0 to 4.5 per cent this year, then grow by 3.0 to 5.0 per cent in 2010. CIMB Thai had no plans to expand through mergers or acquisitions, Subhak said. Rival Thanachart Bank, 49 per cent owned by Canada’s Bank of Nova Scotia, has expressed interest in buying almost half of Siam City Bank. -- Reuters