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RAM Ratings affirms CIMB Thai
Published on 29 Aug 2025.
RAM Ratings has affirmed CIMB Thai Bank Public Company Limited’s (CIMB Thai or the Bank) AA2/Stable/P1 financial institution ratings and the AA3/Stable rating of its RM2 bil Tier-2 Subordinated Debt Programme (2014/2044).
The ratings benefit from an uplift based on RAM’s assessment of the high likelihood of support from CIMB Thai’s immediate parent, CIMB Bank Berhad (rated AAA/Stable/P1), when needed, reflecting the Bank’s strategic role in CIMB Group Holdings Berhad’s (the Group) ASEAN-focused strategy. Under its Forward30 strategy, CIMB Thai is reallocating capital within its consumer banking segment to improve weak risk-adjusted returns, particularly in auto financing. Repositioning itself as a niche player, the Bank is focusing on wholesale banking and wealth management, which collectively have contributed over half of its pre-tax profits in recent years. It remains the Group’s largest generator of cross-border income, with THB1.1 bil (RM145 mil) booked outside of CIMB Thai in FY Dec 2024.
CIMB Thai’s gross impaired loan (GIL) ratio eased to 2.6% as at end-June 2025, down from 3.4% at the end-December 2023, slightly better than the Thai banking industry’s average of 2.8%. This improvement was driven by sizeable loan disposals and write-offs. However, underlying asset quality pressures persist, as seen in the higher formation of net newly classified impaired loans ratio of 1.3% in FY Dec 2024 (FY Dec 2023: 0.9%). Fresh impairments mainly originated from the auto lending portfolio, the GIL ratio of which rose to 2.6% by end-June 2025, compared to 1.8% at the end of December 2023. This underscores the sluggish economy and poorer repayment capacity of borrowers. Low car prices contributed to a higher credit cost ratio of 1.8% in fiscal 2024 while pre-emptive management overlays for the auto segment kept the metric high at an annualised 1.2% in 1H fiscal 2025.
The Bank’s exposure to customers with direct exports to the US is limited. While management continues to assess the broader implications of US tariffs, potential credit deterioration is expected to be manageable. This will be supported by the much smaller SME exposure as a result of CIMB Thai’s portfolio deleveraging strategy in the last few years and tightened credit underwriting standards. A robust common equity-tier 1 capital ratio of 17.0% as at end-December 2024 (end-December 2023: 16.4%) (industry: 17.3%) combined with stronger loan loss coverage provides an ample cushion to absorb potential credit weakening. The Bank’s GIL coverage ratio was a lofty 170% on the same date (end-December 2023: 126%).
CIMB Thai’s return on assets has ranged between 0.4% and 0.8% over the past five years, constrained by an elevated operating cost structure and impairment charges as well as thinning margins. In FY Dec 2024 and 1H FY Dec 2025, profitability stayed modest following continued margin compression and hefty provisions. Earnings will continue to be pressured in the near term from potential credit headwinds and narrowing margins.
Analytical contacts
Johan Faizul
(603) 2708 8235
johan@ram.com.my
Amy Lo
(603) 2708 8289
amy@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
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