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RAM Ratings raises outlook on CIMB Thai’s AA2/P1 financial institution ratings to positive
Published on 02 Sep 2026.
RAM Ratings has revised the outlook on CIMB Thai Bank Public Company Limited’s (CIMB Thai or the Bank) AA2 long-term financial institution rating to positive from stable, while affirming all ratings. The outlook on the Bank’s RM2 bil Tier-2 Subordinated Debt Programme, rated AA3, has also been revised to positive.
The positive outlook reflects our view that the planned divestment of its loss-making auto finance business, together with broader strategic initiatives to strengthen profitability, is credit positive and should structurally enhance asset quality and earnings profile. In May 2026, CIMB Thai announced the sale of its automobile financing portfolio, representing around 13% of gross loans as at end-December 2025, with completion expected by year end.
Despite accounting for less than 15% of total loans, the auto segment generated more than 70% of loan-loss provisions during 2023-2025. We envisage credit cost ratio to decline to 40-45 bps, from above 100 bps in the last three years. Management expects this, along with efforts to expand fee income, enhance cross-selling and streamline operations, to lift its after-tax return on equity to 10-12% by 2027 (FY Dec 2025: 4.5%). This is equivalent to a pre-tax return on assets of around 0.8% (FY Dec 2025: 0.5%) at the lower end of the management’s target range. While the transaction modestly reduces business diversification, we view the impact as limited given the sub-scale and weak risk-adjusted returns of the auto franchise.
The divestment forms part of CIMB Thai’s strategic repositioning towards a more focused business model following a prolonged period of weak profitability. Management is prioritising wholesale banking and wealth management, where the Bank can pursue higher risk-adjusted returns and leverage the CIMB Group Berhad's (the Group) ASEAN network. It also intends to optimise capital, targeting a common equity tier-1 capital ratio of 14% by 2027, down from 15.4% as at end-June 2026. From a credit perspective, the prospective improvement in profitability and asset quality currently outweighs the lower capital headroom.
CIMB Thai’s ratings continue to benefit from an uplift based on our assessment of a ‘high’ likelihood of extraordinary support from its immediate parent, CIMB Bank Berhad (AAA/Stable/P1). This reflects CIMB Thai’s role in advancing the Group’s ASEAN-focused strategy, as well as shared branding, significant parent oversight and influence the Group has over CIMB Thai. These factors are balanced against CIMB Thai’s modest profit contribution to the Group. While Thai foreign ownership conditions no longer allow direct capital injections, other forms of shareholder support remain available.
RAM continues to monitor the execution risk surrounding CIMB Thai’s efforts to expand recurring fee income, exercise cost discipline and preserve sound underwriting standards. Successful execution of these initiatives, leading to sustained profitability improvement consistent with management’s targeted trajectory, would support an upgrade.
Analytical contacts
Amy Lo
(603) 2708 8289
amy@ram.com.my
Kee Hwai Zher
(603) 2708 8259
hwaizher.kee@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.
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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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