Maybank Investment Bank Berhad
Date of Report: September 1, 2025
Robust Performance and Regional Risks: Deep Dive into CIMB Group Holdings’ 2Q25 Financial Results

Executive Summary: CIMB Group’s 2Q25 Results and Outlook

CIMB Group Holdings, one of Malaysia’s largest banking groups with a significant ASEAN footprint, posted 1H25 earnings in line with expectations. The group’s regional exposure, especially in Indonesia, Singapore, and Thailand, continues to shape both its opportunities and risks. Maybank Investment Bank Berhad maintains a HOLD rating on CIMB, with a target price of MYR7.60, reflecting a cautious but stable outlook.

Key Financial Highlights: Solid Performance Amidst Regional Volatility

• 2Q25 net profit: MYR1.89 billion (down 4% YoY, down 4% QoQ)
• 1H25 net profit: MYR3.86 billion (down 1% YoY), meeting 50% of full-year forecast
• Stable net interest margin (NIM) QoQ; loan growth at 1% YoY (+3.6% ex-forex)
• 1H25 operating profit declined 2.2% YoY, supported by lower provisions
• Interim dividend per share (DPS): 19.8 sen (payout ratio: 55.5%)

CIMB Group: Business Overview and Regional Footprint

• CIMB Group Holdings offers consumer and investment banking services.
• Majority stake in PT CIMB Niaga (Indonesia).
• Overseas earnings accounted for 40% of group pretax profit in 1H25.
• Major shareholders: Khazanah Nasional (21.5%), Employees Provident Fund (16.5%), Kumpulan Wang Persaraan (6.5%)

Share Price and Market Performance

• Current share price: MYR7.43
• 12-month price target: MYR7.60 (+2%)
• 52-week high/low: MYR8.49 / MYR6.35
• Market capitalisation: MYR79.9 billion (USD18.9 billion)
• Free float: 27.8%, Issued shares: 10,760 million

Loan and Deposit Growth: Mixed Performance Across ASEAN

• Total loans grew only 1% YoY; 3.6% YoY growth on constant currency basis.
• Loan growth by country (YoY, constant currency): Malaysia +2.6%, Indonesia +8.8%, Singapore +9%, Thailand -2.6%.
• Group deposits rose 2.2% YoY; 4.9% YoY on constant currency basis.
• CASA (Current Account Savings Account) deposits grew faster, up 10% YoY group-wide, with notable rises in Singapore (+17.1%) and Thailand (+39.6%).
• CASA ratio at end-Jun 2025: 44.0% (vs. 43.8% end-Mar 2025)
• Loan/deposit ratio: 88.0% (end-Jun 2025)

Net Interest Margin (NIM): Stability Amid Compression Risks

• Group NIM: 2.15% (down 1bp QoQ)
• Malaysia NIM: 1.80% (+1bp QoQ)
• Singapore NIM: 1.45% (+16bps QoQ)
• Indonesia NIM: slipped 6bps QoQ
• Thailand NIM: declined 35bps QoQ
• YTD NIM contraction: 5bps (from 2.21% in FY24 to 2.16% in 1H25)

Non-Interest Income and Operating Expenses

• Group non-interest income declined 3.7% YoY in 1H25.
• Fee income down 5% YoY; trading and FX income down 2.5% YoY.
• Overheads up just 0.1% YoY.
• Personnel costs dropped 0.7% YoY; establishment and admin costs down 8.3% and 5.9% YoY, respectively.
• Marketing expenses up 58.2% YoY, mainly due to campaigns and variable partnership costs.
• Technology spend up 0.6% YoY.
• Negative JAWS in 1H25, as operating income fell by 1.2% YoY while expenses remained flat.
• Cost/income ratio (CIR): 46.2% (up from 45.6% in 1H24)

Asset Quality and Provisioning: Improved Coverage

• Gross impaired loans (GIL) ratio: 2.1% (end-Jun 2025), down from 2.2% (end-Mar 2025)
• Credit cost: 32bps in 2Q25, up from 26bps in 1Q25; averaged 29bps in 1H25.
• Loan loss coverage: 100.7% (end-Jun 2025)
• Management/macro-economic overlays: MYR600m allocated (MYR500m in 2Q25, MYR100m in 1Q25)

Capital Strength and Dividend Payouts

• CET1 ratio: 14.7% (end-Jun 2025)
• Total capital ratio: 18.3%
• Dividend policy: payout ratio of 40-60% maintained (actual: 55.5% in 1H25 and 1H24)
• Interim DPS for 1H25: 19.75 sen (excluding special DPS)

Full-Year Forecasts and Key Financial Metrics

• FY25 forecast unchanged; ROE expected at 10.9% (management target: 11-11.5%)
• Loan growth forecast tweaked to 3.5% (from 4.5%)
• NIM compression revised to -7bps (from -5bps)
• CIR forecast adjusted to 47.3% (from 47.5%)
• Credit cost expected at 33bps (from 36bps)

Risk Factors and Regional Exposure

• Economic slowdown in Malaysia poses significant risks to CIMB’s performance.
• Regional exposures (Indonesia, Thailand, Singapore) increase vulnerability to local volatility.
• Potential further interest rate cuts in Indonesia may compress margins.
• Weakening of the Indonesian Rupiah (IDR) could impact PT CIMB Niaga’s earnings translation.

Historical Ratings and Price Targets

• Maybank IBG’s rating system: BUY (>10% expected return), HOLD (0-10%), SELL (<0%)
• CIMB’s ratings have fluctuated, reflecting market conditions and performance outlook.
• Latest recommendation: HOLD at RM7.6 (September 2025)

Conclusion: Strategic Positioning and Outlook

CIMB Group’s 2Q25 results underscore both resilience and the need for caution. Stable profitability, well-managed expenses, and prudent provisioning have helped the bank weather regional volatility. However, below-target loan growth and lingering NIM compression signal that CIMB’s regional diversification, while offering growth, brings persistent risks. Investors should continue to monitor macroeconomic trends in ASEAN markets, as these will shape CIMB’s trajectory in the coming quarters.

Contact Information

CIMB Group Holdings is covered by Maybank Investment Bank Berhad, with analyst Desmond Ch’ng, BFP, FCA. For further information or research queries, reach out to the Maybank IBG research offices across Malaysia, Singapore, Indonesia, India, Philippines, Thailand, Vietnam, Hong Kong, and London.

Disclaimer

This article summarizes the comprehensive research and financial analysis provided by Maybank Investment Bank Berhad. For investment decisions, readers are advised to seek professional advice tailored to their individual needs.