Latest news with #pre-Covid-19
The Star
22-07-2025
- Business
- The Star
CIMB deepens push in Thailand, Indonesia
KUALA LUMPUR: CIMB Group Holdings Bhd continues to sharpen its focus in Thailand and Indonesia despite economic headwinds, concentrating on cross-border banking in Thailand and scaling up Islamic finance in Indonesia to tap into long-term growth. Group chief executive officer (CEO) Novan Amirudin said while Thailand's domestic growth remains challenging, cross-border activity is on the rise as Thai corporates expand abroad. CIMB, he added, continues to play an active role in facilitating these transactions. 'Thailand is facing a number of economic headwinds, with the last major investment cycle centred around petrochemicals and automotive. It has been a while since the country saw large-scale investments. 'There is also a heavy reliance on tourism and while the numbers in tourism have returned, spending has yet to recover to pre-Covid-19 pandemic levels. 'As an operator in Thailand, CIMB is also feeling the impact of these issues. Nonetheless, Thailand remains a key part of our overall franchise because it completes our Asean proposition,' he said during the Asean Media Day at the bank's headquarters yesterday. Meanwhile, Novan highlighted Islamic banking as a promising area for CIMB's Indonesian arm, noting that although Indonesia has the world's largest Muslim population, Islamic banking penetration remains low at only 8% of the market. In comparison, Malaysia's Islamic banking penetration stands at 50%. 'Where I see CIMB Niaga Syariah playing a key role in the Indonesian market is through the product innovation and the solutions we can bring to Indonesia. 'There are a lot of lessons that we have learned from the Malaysian market, and if we can marry that with the domestic nuances of operating in Indonesia – the different perspectives, cultures, and requirements – we can offer Indonesians a good alternative to the banking products available today. 'I do see that there are a lot of areas for us to play in, given that the penetration is only at 8% and the demand for such services is high,' he said. For the six months ended June 30, 2025, CIMB's Thai banking arm saw a 21.8% year-on-year (y-o-y) decline in net profit to 1.01 billion baht (RM132.45mil). CIMB Thai Bank PCL, a 94.83%-owned subsidiary of CIMB, attributed the softer performance to one-off items, including adjustments in revenue recognition under the effective interest rate methodology and an additional expected credit loss overlay. CIMB Thai president and chief executive officer Wut Thanittiraporn said in a statement that these were 'proactive measures taken to strengthen the bank's financial resilience in the long term, and were not a result of any deterioration in asset quality'. CIMB Thai's consolidated operating income contracted 257.8 million baht or 3.7% on a y-o-y basis. The decline was mainly due to a 13.6% drop in net interest income to 646 million baht, driven primarily by lower interest income on loans. This was partially offset by higher net fee and service income of 30.5 million baht. On a broader outlook, Novan said the bank is 'in a good place' and its portfolio remains 'extremely strong' despite uncertainties from tariffs. When asked if CIMB expects a decline in earnings for financial year 2026, he said the group will 'do what it takes to be nimble, to pivot its strategies by looking at its efficiencies, portfolio, credit losses, non-interest income and cost of funds to mitigate the impact from tariffs. 'Assuming tariffs continue to rise, this will inevitably impact the broader economy through increased costs and shifting supply chains. 'If economic growth slows, loan growth will also slow – and loan growth is one source of income for banks. 'However, it is more complex than that as a bank's interest income comes from loan growth, as well as what it makes from the net interest margins, which in turn are influenced by the financial institution's cost of funds versus its credit spread that is tied to the customer risk profiles it onboards,' Novan said. He added that in a declining interest rate environment, as seen in recent months, interest margins have narrowed, leading to lower interest income. 'However, interest income is not the only income that we make as a bank. About 30% of our income comes from non-interest income, such as fees, foreign exchange, payments, and advisory services. 'This is an area where CIMB has been extremely active and forms a critical part of our Forward 30 plan, where we plan to increase this portion of our income.' Novan also noted that tools like artificial intelligence are being deployed to enhance the bank's efficiency. He pointed out that another key component of the profit and loss statement is credit losses. 'If a bank grows loans very aggressively, takes on a lot of high-risk customers, then its risk of credit losses will be a lot higher. 'At CIMB, we have reconstituted our portfolio over the last few years. 'We have exited businesses that were very hard to operate. > TURN TO PAGE 2 We have reduced our risk profile and credit losses as well as increased our coverage ratio. 'We are in a good place. Tariffs are just one factor that would impact a bank's financials. What is important is how we choose to play with different levers to offset the impact it brings,' he said. Meanwhile, CIMB chief investment officer fixed income Ng Boon Hoa said the bank remains 'neutral' on the Malaysian market because 'the catalysts have been quite lacking'. 'Policy support and foreign direct investment flows have been relatively muted after a strong run last year. 'There is also some lingering uncertainty surrounding tariffs, seeing as Malaysia has not struck a trade deal with the United State. It remains to be seen whether the country can close the deal.' Ng also noted that first-quarter earnings were relatively muted, growing only 1% to 2% compared to last year where the country had an earnings growth of 10%. 'That has not translated well into the equity market, and we do not think it paints a very positive picture moving forward,' he said. Ng added that the wider scope of the sales and service tax has caused 'a bit of concern about higher prices and inflation and also softer consumer demand'. 'The inflection point, however, will probably come from the foreign flows. Foreign holdings are actually quite low in equities in Malaysia. Any pickup will be positive. 'Foreign direct investment – particularly in data centre developments across the Johor-Singapore Special Economic Zone – could provide a lift to Malaysian markets. 'We have a FBM KLCI target of around 1,600, based on a reasonable 14 times price-to-earnings ratio,' he said. CIMB continues to favour high-yielding sectors such as banking, utilities and construction. 'We think they are quite good in terms of valuations,' Ng said. He noted that the ringgit's strength could also play to the benefit of the Malaysian equity markets. 'The Singapore dollar and the ringgit are expected to appreciate against the greenback in the second half of the year. 'Hence, we still like Malaysian and Singaporean bonds, which deserve an allocation of investors' assets as they are considered safe havens, particularly from a currency perspective,' he said.
New Straits Times
16-07-2025
- Business
- New Straits Times
RHB: Malaysia's rubber sector faces headwinds amid global competition, weak pricing power
KUALA LUMPUR: The outlook for Malaysia's rubber sector continues to face headwinds due to the ongoing inventory consolidation cycle and rising competitive pressures in global markets, said RHB Research. The firm said the pricing power of Malaysian glove manufacturers has diminished since the entry of Chinese manufacturers, based on its observation. "We understand that cost pass-through is now more challenging than during the pre-Covid-19 period, as glovemakers are only able to pass on 50 per cent of any cost increase to customers vs a full cost pass-through previously. "With no signs of competition easing, we expect glovemakers' profitability to remain under pressure in the near future," it said in a note. That said, RHB Research said competition remains intense in non-US markets due to the hostile pricing strategy adopted by Chinese manufacturers. The firm also expects the commissioning of new plants in Indonesia and Vietnam to pose a threat to Malaysia's rubber product sales to the US by as early as Nov 2025. "Given the intensifying competition expected in late fourth quarter (Q4) 2025, we hold the view that investor sentiment in the glove industry will remain weak throughout the second half of 2025 (2H25)."
Malaysian Reserve
14-07-2025
- Business
- Malaysian Reserve
Interest rate cut needs institutional follow through to be adequate
The OPR cut is important, but banks and govt machineries at the federal, state and local level need to make a paradigm shift to promote expansionary sentiments LAST week, Bank Negara Malaysia (BNM) duly delivered what was expected from the central bank, lowering the banking system's interest rate to promote spending and investment — in theory, at least. The benchmark Overnight Policy Rate (OPR) was cut down for the first time since July 2020, by 25 basis points (bps) to 1.75%, heralding an incoming economic slowdown and trade headwinds. With the global economic growth expected to moderate in the second half of the year (2H25) against the backdrop of trade tensions and geopolitical risk, Malaysia cannot afford to allow domestic demand to be weighed down by external factors. The Malaysian economic growth is already projected to slow down to around 4% this year, from 5.5% in 2024 as US President Donald Trump's tariff tantrum continues, dampening export momentum. Nonetheless, economists are confident that domestic demand, driven by labour market improvements and tourism recovery, will remain resilient. Upward sentiments in the labour market are underlined by the unemployment rate holding steady at a decade-low of 3% in May 2025, supported by the stable growth pace of the labour force (0.2% month-to-month) and decline in loss of employment (-14%). The tourism industry, in the meantime, is estimated to record up to 7.8% growth, or 26.9 million tourist arrivals this year, marking a full recovery to pre-Covid-19 levels in 2019. The World Travel & Tourism Council projects that the tourism and travel industry will contribute 11.3% to the national GDP, or RM332 billion, in 2025, significantly higher than last year's RM218 billion. However, economists have cautioned that policy interventions by the central bank would be useless if the banking system and the whole government machinery — either at federal, state or local govt level — fail to shift-up and follow through. The lowering of OPR will only affect consumers' pockets positively if banks decide to channel the savings to real loan rates. An economist also cautioned that despite OPR being cut down to 2.75% the real interest rate stood at 1.55%, which is still high by historical standards. The long-term average real interest rate in Malaysia is 0.88%, which means borrowers are still paying an expensive cost for loans in real terms, he argued. Monetary policy needs to be accommodative, and business policy needs to be entrepreneur and people-friendly for consumer confidence to flourish and spending to grow. Unbeknownst to the public, local governments are especially influential in determining spending patterns among their constituents, as they have wide-ranging, self-interpreted local laws at their disposal, which, in some occasions, are ridiculously baffling and beyond common sense. Take, for instance, one particular state city where its enforcement division is making restrictive interpretations of the law governing food kiosks, which, in effect, sabotage genuine entrepreneurs and discourage customers from frequenting the joint. This kiosk, selling toasts and simple breakfast delicacies at a local lake park, was a hit and went viral even before the word 'viral' was invented. It was, however, recently slapped with a weird ruling by the local authority, banning it from placing tables and chairs for its customers, even though the area in front of the kiosk is vacant and clearly designed to accommodate dining chairs and tables. Weird, to say the least. But frankly speaking, it clearly looks like spiteful sabotage by the very people who are supposed to promote and support entrepreneurship. Now, with the aligning of powers between the state and federal, the government might want to consider covering these local councils as part of the economic support system. It is developmental economy on a longer horizon, which should be a priority for the nation. Asuki Abas is the editor of The Malaysian Reserve, and a former entrepreneur disillusioned with bureaucracy. This article first appeared in The Malaysian Reserve weekly print edition
The Star
14-07-2025
- Business
- The Star
Banks poised for stable margins in second quarter
PETALING JAYA: Net interest margins (NIM) of local banks are likely to remain stable in the second quarter of 2025 (2Q25), with a slight increase expected, as they benefit from improved liquidity following Bank Negara's recent reduction of the statutory reserve requirement (SRR) from 2% to 1% effective May 16. Building on this, analysts estimate that the SRR cut has released about RM19bil in liquidity into the banking system. CGSI Research said banks could have benefitted from additional interest income earned from the funds released, potentially lifting banks' net interest income (NII) growth. 'With this, banks' NIM could be stable quarter-on-quarter (q-o-q) in 2Q25 with an upward bias. As a preview of 2Q25 financial results, we expect core net profit of banks under our coverage to come in at between RM9.2bil and RM9.3bil, slightly below the RM9.37bil recorded in 1Q25,' CGSI Research said in a report. The research firm said it was not overly concerned about the potential q-o-q upturn in loan loss provisioning (LLP) in 2Q25, as the credit charge-off rate is likely to remain low at about 15 basis points, which is below the pre-Covid-19 level of 25 basis points. As for loans, growth is expected to come in at 5% year-on-year (y-o-y) by end-June 2025, slightly lower than the 5.2% recorded at end-March. According to CGSI Research, loan growth in the banking sector showed a V-shaped pattern, easing to 5.1% y-o-y at end-April 2025 before recovering to 5.3% by end-May. This was driven by fluctuations in business loan growth, which slowed from 4.8% y-o-y in March to 4.6% in April, then picked up to 5% in May. In contrast, household loan growth remained steady at around 5.9% throughout the three months. Meanwhile, the research firm expects the gross impaired loan ratio to be around 1.45% at end-June 2025, roughly in line with 1.42% at end-March. Going back to 1Q25, CGSI Research said three banks, namely, Hong Leong Bank Bhd (HLB), Affin Bank Bhd and Alliance Bank Malaysia Bhd , had recorded double-digit y-o-y core net profit growth, which was primarily driven by lower LLP. Noteworthy too was that Malayan Banking Bhd delivered a record-high core net profit of RM2.59bil in 1Q25, thanks to a 17.9% drop in LLP. HLB's core net profit of RM1.35bil in 1Q25 was also an all-time high, but this was lifted by a RM399mil write-back in management overlay, said the research firm. Ongoing write-backs of management overlays by banks are the potential re-rating catalyst for the sector. This, along with expectations of higher dividend payout ratios by most banks, supports CGSI Research's 'overweight' rating on bank stocks.
AllAfrica
11-07-2025
- Politics
- AllAfrica
Hun Sen on cyberscam criticism: 'Revoke Sam Rainsy's citizenship'
Hun Sen's family regime in Cambodia is accused of being complicit in cyber scams that use the victims of human trafficking to steal billions of dollars a year online. The response from Hun Sen is a constitutional amendment designed to allow opposition leader Sam Rainsy to be stripped of his Cambodian nationality. On June 28, Sam Rainsy made a statement which he claims explains the real reasons that have pushed Hun Sen to manufacture this year a confrontation between Cambodia and Thailand. The Thai government has been trying to curb the activity of cyber-scam compounds in Cambodia, as well as in Myanmar. Industrial-scale cybercrime in Southeast Asia can no longer be tolerated in Thailand. The scam compounds are a major problem both for the Thai nationals who can be trapped as slaves there and for the wider Thai economy, where tourism has failed to recover to pre-Covid-19 levels. Chinese tourists to Thailand understand the dangers of being abducted to become slaves in cyber-scam compounds, and prefer to avoid the region. Thailand needs to see the issue effectively tackled, regardless of who is its prime minister. But on the issue of organized cybercrime, it seems that Hun Sen has nothing to say. His silence speaks volumes. Hun Sen resorted to anti-Thai rhetoric and propaganda to distract attention from the real issue. The border closures between the two countries that have taken place mean that the estimated 2 million Cambodians who work in Thailand have been paying the price for Hun Sen's smokescreen. Hun Sen's response to Sam Rainsy's statement was to tell Cambodia's minister of justice to find a way to amend the constitution to allow selective cancellations of nationality. The Cambodian constitution states that Khmers shall not be deprived of their nationality, which is also prohibited by the 1991 Paris Peace Agreements on Cambodia. Despite Cambodian government denials, the growing weight of evidence that the Cambodian government is complicit in organized cyber-slavery has become impossible to ignore. Amnesty International in June became the latest organization to identify the Cambodian government as being complicit in cyber-crime. The Amnesty report says that the government has failed to investigate scam compounds, and has 'acquiesced to the torture and other ill-treatment taking place at scamming compounds.' The findings were shared with the government before publication, but there has been no response of substance. The report follows research published by the Humanity Research Consultancy (HRC) in May. The HRC report estimated that cyber-scam income in Cambodia likely totals $12.5 billion to $19 billion per year, or as much as 60% of GDP. 'Transnational fraud is one of Cambodia's many state-abetted criminal interests,' and the scale of the proceeds makes the industry crucial to the survival of the ruling Cambodian People's Party, the HRC says. In April, the United Nations Office on Drugs and Crime (UNODC) found that Chinese criminal elements involved in cyber-scamming have obtained Cambodian citizenship allowing them to control property and investment holdings, including islands off the coast of Sihanoukville. The Cambodian government has made no serious attempt to address the findings of Amnesty International, the HRC, or the UNODC, nor to stamp out cyber-scam compounds. Hun Sen has tried for decades to silence Sam Rainsy, who lives in exile in Paris. The grenade attack on a protest march that Sam Rainsy was leading in Phnom Penh in March 1997 left 16 dead and over 100 wounded. The trial in Paris of Cambodian generals Hing Bun Heang and Huy Piseth for their alleged role in the attack opened in the absence of the two accused in March this year. Hun Sen has used the country's politically controlled courts to accumulate over 100 years of jail sentences against Sam Rainsy on various charges, as well as to dissolve in 2017 the opposition Cambodia National Rescue Party. Sam Rainsy co-founded the party with Kem Sokha, who was CNRP leader when it was dissolved. Kem Sokha remains in house detention in Cambodia after conviction on a charge of treason, for which no serious evidence was ever offered. Hun Sen meanwhile has been enacting laws designed to curtail Sam Rainsy's political role. His legislation of 2017 made it impossible for a person sentenced to a prison term to be the leader of a political party. In 2021, he made it impossible for a person with dual nationality to hold the posts of prime minister, president of the national assembly or president of the senate. Sam Rainsy has French and Cambodian nationality. The Cambodian diaspora is spread globally in countries where free speech is the norm, which means that the regime will never be able to silence diasporic criticism. The sooner it can find ways to listen to and work with those who tell uncomfortable truths, the better for Cambodia. The only way that the issue of Cambodian government corruption will go away is for the government to deal with the core of the problem. David Whitehouse is a freelance journalist who has lived in Paris for 30 years. He has both French and British nationality.
