CIMB Group Earnings Call: Record Profit, Clear Targets

CIMB Group Holdings Bhd ((CIMDF)) has held its Q4 earnings call. Read on for the main highlights of the call.

CIMB Group Holdings’ latest earnings call struck a broadly upbeat tone, balancing record profitability and best‑ever asset quality against visible regional headwinds. Management stressed disciplined execution in Malaysia and Singapore, resilient margins, and strong shareholder returns, while also cautioning that FX moves, NIM pressure in Indonesia and Singapore, and softer Thailand trends could temper reported growth.

Record Net Profit and ROE

CIMB delivered a record FY2025 net profit of MYR 7.9 billion, helped by solid core banking performance and disciplined risk management. Return on equity reached 11.3%, 10 basis points higher year on year, signaling that the group is already operating near its medium‑term profitability targets even before planned efficiency and growth initiatives fully kick in.

Stable Income in a Lower‑Rate Environment

Total income grew about 4.2% year on year, with constant‑currency income up 3.8% quarter on quarter despite regional rate cuts. Net interest income was flat in headline terms, but actually rose around 3.2% on a constant‑currency basis as a deliberate cash strategy cushioned margin compression and offset lower yields in certain ASEAN markets.

NIM Compression Shows Signs of Bottoming

Group NIM fell roughly 8 basis points year on year, but this was within earlier guidance and management said margins now appear to be bottoming. Q4 and January data showed stabilization, and Malaysia even delivered a 4‑basis‑point NIM expansion quarter on quarter, giving investors some comfort that the worst of the squeeze may be behind the bank.

Asset and Deposit Growth Supports Funding

On a constant‑currency basis, total assets expanded 6.1% and deposits rose about 5.4%, strengthening the funding base. This allowed CIMB to cut its cost of funds by 21 basis points year on year and improve loan‑to‑deposit dynamics, leaving the group better positioned to support targeted loan growth without sacrificing balance‑sheet resilience.

Fee Income and Client Franchise Momentum

Non‑interest income rose 3.1% year on year, with client‑franchise revenues growing faster at 4.8%, underscoring strong underlying customer engagement. Fees and commissions were up 3.2%, treasury client sales gained 7.2%, and wealth revenue surged 9.2% alongside a 3% increase in wealth customers, pointing to deeper, higher‑value relationships.

Cost Discipline and Tech Investment

Operating expenses increased only 2% year on year, keeping the cost‑to‑income ratio at 47.3%, just above management’s sub‑47% target. At the same time, CIMB maintained strategic investment with MYR 1.7 billion spent on technology, or 7.8% of income, while holding personnel costs flat, signaling a focus on scalable digital growth rather than headcount expansion.

Best‑Ever Asset Quality

Asset quality reached its strongest level on record, with the gross impaired loan ratio improving from 2.1% to 1.7% over the year. Credit costs were contained at about 30 basis points and loan loss coverage stayed robust at 103.2%, giving the group a solid buffer against potential macro shocks across its ASEAN footprint.

Capital Strength and Shareholder Returns

CIMB’s CET1 ratio stood at about 14.3%, providing strategic flexibility while still enabling enhanced capital returns. The bank announced a record dividend of MYR 0.471 per share, implying a yield of roughly 5.7%, and reaffirmed a MYR 2 billion capital return program through end‑2027, reinforcing its shareholder‑friendly stance.

Digital Platforms and New Products

The group highlighted progress on its digital agenda, including the launch of OCTO Biz for corporate clients and continued growth at Touch ’n Go, whose registered users rose 11% to 32.3 million and remain on a profitable trajectory. CIMB is also preparing a tokenized bond offering and has been admitted to Bank Negara’s Digital Asset Innovation Hub, positioning it for future digital finance opportunities.

FX Headwinds and NIM Pressure by Market

Management flagged the stronger Malaysian ringgit as a continuing drag on reported earnings from overseas units, particularly Indonesia. NIM pressure remained most acute in Indonesia and Singapore, where margins declined about 12 and 18 basis points respectively due to policy rate cuts and intense liquidity and competitive conditions in those markets.

Indonesia and Thailand Challenges

Indonesia and Thailand underperformed as macro and liquidity pressures reduced both risk‑weighted asset allocation and profit contributions. Thailand saw negative loan growth across segments and ongoing restructuring, which management described as a work in progress, indicating that a full turnaround will likely take more time than initially hoped.

Q4 Normalization After Exceptional Q3

Quarter‑on‑quarter comparisons were distorted by a particularly strong Q3, when trading income was elevated and one‑off NPL sales of around MYR 170 million boosted results. In Q4, trading income fell about 48% sequentially and those NPL gains did not repeat, leading to what management framed as a natural normalization rather than a deterioration in core trends.

Higher Provisions and Overlays

Some parts of the group, notably Commercial Banking and the Philippines, booked higher provisions and macro overlays, which weighed on year‑on‑year profit before tax. Recoveries were also lower versus Q3’s high base, but overall credit costs remained within the guided range, suggesting a conservative stance rather than emerging stress.

Slight Miss on Cost‑to‑Income Target

The reported cost‑to‑income ratio of 47.3% came in just above the sub‑47% target, partly due to a modest 2% increase in operating expenses. Additional marketing and partnership spending, including in the Philippines, contributed to the overshoot, but management framed these as necessary investments to support future revenue growth.

Indonesia Free‑Float and Capital Options

Potential regulatory or market moves to raise free float requirements in Indonesia, possibly to around 15%, introduce some uncertainty around CIMB’s holdings. Management stated it would consider all options, including partial sales, distribution in specie, or an IPO, if needed, emphasizing that any decision would balance regulatory needs with shareholder value.

FX Sensitivity and Reported ROE

The bank underscored that reported results are mechanically sensitive to FX swings, given Indonesia’s roughly 22% contribution to profit before tax. Further appreciation of the ringgit could therefore dampen reported ROE even if underlying operations remain strong, a key factor for investors tracking headline ratios.

Forward‑Looking Guidance and 2026 Targets

CIMB reaffirmed 2026 targets of 11.0–11.5% ROE, underpinned by constant‑currency asset growth of 5–7%, a cost‑to‑income ratio below 47%, credit costs of 25–35 basis points, and CET1 of at least 14%, with an ambition for 12–13% ROE by 2027. Management expects group NIMs to be broadly stable, with Malaysia flat to slightly higher, Niaga at 3.9–4.1% plus or minus 10 basis points, and country loan growth led by Malaysia, Indonesia, and high single‑digit Singapore while Thailand likely contracts.

CIMB’s earnings call painted a picture of a bank executing well on its strategy, delivering record profits, tight cost control, and strong capital while investing in digital and wealth growth. Regional headwinds, especially FX and market‑specific NIM and growth pressures, remain key watchpoints, but management’s clear 2026–2027 targets and commitment to capital returns offer a constructive outlook for investors.