CIMB able to weather effects of rising tariffs

Borneo Post

5 days ago

While tariffs are an external factor beyond the bank's control, Novan (left) says CIMB has levers in place to cushion potential impacts on its financial performance.
KUALA LUMPUR (July 23): CIMB Group Holdings Bhd is confident it can weather the effects of rising tariffs and economic uncertainties through a mix of income diversification, operational efficiency, and risk management, said group chief executive officer Novan Amirudin.
He said while tariffs are an external factor beyond the bank's control, it has levers in place to cushion potential impacts on its financial performance.
'We at CIMB have reconstituted our portfolio over the last few years. We've exited businesses that were very hard to operate. We've reduced our risk profile, we've reduced our credit losses, we've increased our coverage ratio.
'Our portfolio looks extremely strong and we are in a good place. And that would be one more area that can help our financial statement.
'Tariffs is one factor that would impact a company's or a bank's financials. But it's how we then choose to play with the different levers to offset that situation, and not every company is the same in that regard.
'We will do what it takes to make sure that we are resilient,' he said during the bank's Asean Media Day on Monday (July 21).
He acknowledged that rising tariff could hurt economic growth which in turn may affect loan growth but stressed that the bank is not solely dependent on loans for income.
'Around 30 per cent of our income comes from non-interest sources, such as foreign exchange, payments, and advisory fees. This has been a key part of our Forward30 strategy to rebalance income streams,' he said.
Novan added that even in a low interest rate environment where net interest margins are narrowing, CIMB is actively improving operational efficiency through tools such as technology and artificial intelligence.
'We are focused on becoming operationally efficient. That reduction in cost can help our bottom line,' he said.
He also highlighted that tariff changes often lead to shifts in supply chains, which may affect different sectors in Asean unevenly.
'Some supply chains may move out of China and redirect exports to Asean. This could increase supply in some markets, like cars for example, and affect local players. We have to watch these shifts closely,' he said.
He reiterated that tariffs are just one factor and cannot be viewed in isolation.
'There are many other things within our control. We cannot sit back and say because there are tariffs, our financials will get impacted. We will pivot our strategies and manage what we can,' he said.
He said the bank will do what it takes to be nimble, to pivot its strategies, to look at its efficiencies, portfolio, credit losses, non-interest income, and cost of funds to mitigate impacts as a result of tariffs. asean CIMB Financing tariffs