[RAM] RAM Ratings affirms ratings of CIMB Group and domestic subsidiaries, outlook stable

RAM Ratings has affirmed the AA₁/Stable/P1 corporate credit ratings (CCRs) of CIMB Group Holdings Berhad (the Group) and the AAA/Stable/P1 financial institution ratings (FIRs) of CIMB Bank Berhad, CIMB Islamic Bank Berhad and CIMB Investment Bank Berhad. The ratings of these entities’ debt facilities have also been affirmed (Table 1).

The affirmations reflect CIMB Group’s well-recognised franchise in ASEAN and Malaysia, and our expectation that its credit metrics will continue to support the ratings. The Group’s asset quality metrics are anticipated to remain broadly stable despite external uncertainties related to US tariff policies. This resilience is underpinned by portfolio rebalancing and derisking efforts undertaken since 2020, which have significantly enhanced the quality of its loan book.

CIMB Group’s above-peer gross impaired loan (GIL) ratio stood at 2.1% as at end-December 2024, reflecting its exposure to the riskier markets of Indonesia and Thailand, which together represent about 23% of its loan book. In 2024, credit quality held up well across the Group’s key markets of Malaysia, Indonesia and Singapore. Thailand, however, remains a pocket of weakness, with still-elevated impairments.

Persistent challenges in CIMB Group’s Thai auto lending portfolio and the indirect effects of global trade frictions pose some downside risks, but these are not expected to materially undermine asset quality. Management foresees the credit cost ratio to stay contained, ranging from 30 bps-40 bps this year (FY Dec 2024: 31 bps). Stronger GIL coverage (with regulatory reserves) of 123.8% as at end-December 2024 from 106.3% – supported by management overlays retained on balance sheet – provides an additional buffer against potential credit deterioration.

In FY Dec 2024, CIMB Group registered a pre-tax profit of RM10.4 bil, an 8.5% y-o-y increase, translating to a return on assets of 1.4% and return on risk-weighted assets of 2.8% (FY Dec 2023: 1.4% and 2.7%). Ongoing prudent cost controls helped keep the cost-to-income ratio largely stable at 46.7%. With its diversified income base and contained credit costs, we expect the Group to maintain its steady profitability trajectory this year.

CIMB Group’s core subsidiaries in Malaysia – CIMB Bank, CIMB Islamic and CIMB Investment – are operationally integrated into the Group’s universal banking platform. We expect these entities to benefit from a “very high” likelihood of extraordinary parental support, if required. The one-notch difference between CIMB Group’s long-term CCR and the long-term FIRs of its banking subsidiaries reflects the former’s structural subordination as a non-operating holding company.




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