MARC Ratings has affirmed its financial institution (FI) ratings on CIMB Bank Berhad at AAA/MARC-1. Concurrently,
the rating agency has also affirmed its rating of AA+ on the bank’s existing RM10.0 billion Basel III-compliant
Tier 2 Subordinated Debt Programme. All the ratings carry a stable outlook.

CIMB Bank’s high systemic importance in the domestic banking industry as the second-largest domestic bank by asset size remains a key factor for the FI ratings.
The bank accounted for a sizeable 17.0% of total loans and 17.9% of core deposits of the domestic
banking industry as at end-1Q2022.

In 2021, the bank recorded higher pre-tax profit of RM3.3 billion compared to RM1.0 billion in the previous year. This momentum continued in 1Q2022 as its pre-tax profit improved by
15.5% y-o-y to RM1.6 billion. The improvement was mainly due to lower impairment charges of RM181.1 million
(1Q2021: RM427.8 million). Net interest margin remained stable at 2.15% during the period.

CIMB Bank’s loan book grew by 4.7% y-o-y to RM329.2 billion in 1Q2022, mainly driven by an increase in housing loans (+7.1% y-o-y) to RM113.7 billion. Geographically,
CIMB Bank is more diversified than most of its peers, with exposure in Singapore and Thailand reading 10.6% and 8.9% as at end-1Q2022.
However, with the bank currently undergoing recalibration of its overseas portfolio, the proportion of its domestic loan
book proportion has increased to 73.6% of total loans compared to 72.9% in 1Q2021.

Consolidated gross impaired loans ratio stood at 2.56% in 1Q2022 (industry average: 1.55%). The bank’s asset quality could come under pressure with some of the
loans under relief measures potentially turning impaired once the assistance is withdrawn. Nonetheless, CIMB Bank’s strong capital
and healthy liquidity positions provide some headroom to cope with potential headwinds in the banking industry. For 1Q2022, Common
Equity Tier 1, Tier 1 capital and total capital ratios stood at 14.8%, 15.5% and 18.8%, well above the minimum regulatory requirements.
At entity level, its liquidity coverage ratio and net stable funding ratio are well above the required levels at 134.1% and 107.1%.