RAM Ratings affirms CIMB Thai's AA2 financial institution rating

RAM Ratings has affirmed CIMB Thai Bank Public Company Limited's (CIMB Thai or the Bank) AA2/Stable/P1 financial institution ratings and the AA3/Stable rating of its RM2 bil Tier-2 Subordinated Debt Programme (2014/2044).

The ratings benefit from an uplift based on RAM's assessment of the high likelihood of support from CIMB Thai's immediate parent, CIMB Bank Berhad (rated AAA/Stable/P1), when needed, reflecting the Bank's strategic role in CIMB Group Holdings Berhad's (the Group) ASEAN-focused strategy. Under its Forward30 strategy, CIMB Thai is reallocating capital within its consumer banking segment to improve weak risk-adjusted returns, particularly in auto financing. Repositioning itself as a niche player, the Bank is focusing on wholesale banking and wealth management, which collectively have contributed over half of its pre-tax profits in recent years. It remains the Group's largest generator of cross-border income, with THB1.1 bil (RM145 mil) booked outside of CIMB Thai in FY Dec 2024.

CIMB Thai's gross impaired loan (GIL) ratio eased to 2.6% as at end-June 2025, down from 3.4% at the end-December 2023, slightly better than the Thai banking industry's average of 2.8%. This improvement was driven by sizeable loan disposals and write-offs. However, underlying asset quality pressures persist, as seen in the higher formation of net newly classified impaired loans ratio of 1.3% in FY Dec 2024 (FY Dec 2023: 0.9%). Fresh impairments mainly originated from the auto lending portfolio, the GIL ratio of which rose to 2.6% by end-June 2025, compared to 1.8% at the end of December 2023. This underscores the sluggish economy and poorer repayment capacity of borrowers. Low car prices contributed to a higher credit cost ratio of 1.8% in fiscal 2024 while pre-emptive management overlays for the auto segment kept the metric high at an annualised 1.2% in 1H fiscal 2025. 

The Bank's exposure to custome