CIMB Bank, a leading commercial bank in Cambodia, experienced a significant growth of 17 percent in deposits during 2023, with individual cu...
CIMB Bank, a leading commercial bank in Cambodia, experienced a significant growth of 17 percent in deposits during 2023, with individual customer deposits rising by 22 percent. However, this positive trend was overshadowed by a decline in deposits from banks and other financial institutions.
Interest income at CIMB Bank increased by 14 percent due to higher returns from its loan portfolio. Nevertheless, the bank faced a staggering 64 percent surge in interest expenses, leading to a 17 percent decline in net interest income.
CEO Bun Yin acknowledged the challenges posed by the escalating cost of funds, attributing it to the ongoing economic recovery post-Covid. Despite the difficulties, he expressed optimism about the economy's potential recovery in 2024.
The rising cost of funds impacted CIMB's net interest margin (NIM), which fell below 3 percent in 2023, signaling reduced profitability. Consequently, the bank adopted a cautious approach to lending, resulting in a 7 percent decrease in loans and advances.
CIMB Bank prides itself on its conservative lending approach, boasting a non-performing loan (NPL) ratio below 2 percent, well below the industry average. By meticulously evaluating prospective borrowers based on various criteria, including creditworthiness and repayment capacity, the bank ensures the quality of its loan portfolio.
The bank's loan portfolio predominantly comprises commercial loans to SMEs, and small-cap, and mid-cap companies, underscoring its commitment to supporting local businesses. CIMB's emphasis on asset quality and prudent lending practices has contributed to its resilient performance amid economic challenges.
CIMB Bank has implemented strategies to mitigate the impact of the economic slowdown, including leveraging its parent bank's network for trade financing and participating in the National Bank of Cambodia's schemes. Additionally, the bank is transitioning towards de-dollarization, with a focus on lending in the local currency to boost confidence in the riel.
Despite facing profitability challenges amidst economic headwinds, CIMB Bank remains steadfast in its commitment to prudent lending practices and supporting the local economy. With a focus on asset quality and strategic initiatives, the bank aims to navigate through the current economic uncertainties and emerge stronger in the coming years.
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