CIMB Islamic bank has been impacted by the pandemic-induced economic conditions, resulting in the bank providing higher impairment charges as a pre-emptive measure and undertaking one-off modification losses. These factors had contributed to a sharp decline in pre-tax profit to RM632.7 million in 2020. Financing growth, which decreased to 8.1% y-o-y to RM85.9 billion of total gross financing last year, will remain muted in 2021 given prevailing weak economic conditions. Its gross impaired loans ratio stood at 1.42% as at end-1Q2021, slightly higher than the industry average of 1.34%. Against this backdrop, the bank is expected to adhere to its cost optimisation stance; it undertook a cost reduction exercise which yielded a decline in operating expenses by 5.1% y-o-y to RM911.1 million in 2020.

CIMB Islamic’s capitalisation as reflected by its Common Equity Tier 1 (CET1) and total capital ratios of 13.3% and 16.8% as at end-2020 provides some buffer to absorb potential asset quality weakening. The bank’s capital position is also supported by the Restricted Profit-Sharing Investment Account of its parent bank. The bank’s liquidity position is deemed to be sound as liquidity coverage ratio of 137.2% and net stable funding ratio of 109.6% stood well above the regulatory requirement.

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