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CIMB Thai Bank seeks to cut cost-to-income ratio

CIMB Thai Bank is considering restructuring some business units in a bid to improve its cost-to-income ratio and bring it in line with the banking industry.

CIMB Thai's ratio is 60 per cent, above the level of 40-50 per cent among its peers, even though its loan growth is the highest in the industry, Narongchai Wongthanavimok, senior executive vice president and chief financial officer, said yesterday.

In the first nine months of the year, the bank recorded loan growth of 20-25 per cent, but net profit was Bt960 million - compared with Bt1.18 billion in the same period last year.

The bank is attempting to trim its cost-to-income ratio to 50 per cent. If successful, it would mean the return on equity should be better, as well, he said.

As part of these efforts, CIMB Thai is considering restructuring its subsidiaries, as some units are operating similar businesses, such as debt collection and hire purchase.

The bank has two hire-purchase subsidiaries - Worldlease, a motorcycle hire-purchase provider, and Center Auto Lease, a passenger car and commercial vehicle lender - and one subsidiary that operates debt collection.

The three subsidiaries should be restructured to improve cost efficiency, he said.

Hire purchase is a high-yield business, and CIMB Thai aims to buy portfolios from other hire-purchase companies to strengthen the business, he added.

Malaysia's CIMB Group has high hopes of getting a high return from CIMB Thai, because Thailand is the third-largest economy among the six most-developed countries in Asean, while its gross domestic product per capita is ranked third, as well.

CIMB Thai generates a return of 5-6 per cent to it parent, but the group wants to see this rise to more than 10 per cent, said Narongchai.

Subhak Siwaraksa, president and chief executive officer of CIMB Thai, said the bank is targeting loan growth of 15-25 per cent next year if the political unrest is resolved within six months, but just 10-15 per cent if that is not the case.

He said the political uncertainty could, however, be an opportunity for the group to assist Thai firms wanting to move their operational base elsewhere in the region to avoid all the uncertainty.


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