CIMB Thai Bank (CIMBT) expects its bad-loan coverage ratio to climb to 100% by year-end, as the bank plans to set aside an additional provision for credit loss after its impending 3.95-billion-baht recapitalisation.
The bank aims to take a 6-billion-baht impairment charge and lower its non-performing loans (NPLs) this year to below 5% of the total by year-end to raise its coverage ratio, said president and chief executive Kittiphun Anutarasoti.
CIMBT, a unit of Malaysia's CIMB Group Holding Bhd, had a bad-loan ratio of 5.8% and a coverage ratio of 93.2% at the end of June.
The bank earlier this month announced a rights offering to raise 3.95 billion baht by allocating 4.54 billion newly issued shares to existing shareholders who are eligible to subscribe to three new shares for every 20 held shares at a price of 0.87 baht each. The subscription period is set between Oct 8 and 12.
The bank's registered capital is expected at 17.4 billion baht, up from 15.1 billion.
After its recapitalisation, the bank's tier-one capital will increase to be on a par with the industry's average of 14.4%, up from 13.6% now.
Under the Fast Forward programme spanning 2018-22 aimed at improving profitability, CIMBT has met 30% of its goals, Mr Kittiphun said.
The bank expects operating profit growth this year to surpass last year's after tallying a 7% gain in the first half. CIMBT's profitability should improve from 2019, Mr Kittiphun said.
The bank's retail loans have grown 10% year-to-date, and the strong momentum is expected to continue for the remainder of this year, Mr Kittiphun said.
CIMBT's wholesale loans are marginally lower than targeted, as private investment has been slower than estimated, but the full-year growth target is reachable, he said.
For small and medium-sized enterprise (SME) loans, the bank decelerated that lending amid infrastructure restructuring.
"We've adopted data analytics and set up SME credit centres to analyse SME loans using data-based lending and risk-based pricing as a pilot project," Mr Kittiphun said. "The function is expected to start from next year and facilitate SME loan growth with better asset quality."
CIMBT's bad SME loan ratio is quite significant, and the bank is installing fraud management programming into the data analytics.
In other news, Mr Kittiphun said he had given information to Krungthai Bank (KTB) for its investigation into loans to Energy Earth Plc that later turned sour. Before joining CIMBT as president, he oversaw KTB's wholesale banking business unit during 2013-16.
CIMBT shares closed yesterday on the Stock Exchange of Thailand at 0.88 baht, down two satang, in trade worth 4.2 million baht.