CIMB to cushion impact of rate cut on NIM by optimising investments

KUALA LUMPUR: CIMB Group Holdings Bhd expects a 3-4 basis points compression in its net interest margin (NIM) this year due to the Overnight Policy Rate (OPR) cut by the central bank last month, but will mitigate this through optimising some of its investments.

CIMB group CEO Tengku Datuk Seri Zafrul Aziz (pix) said there was an OPR cut in 2019, and another one in January 2020 that will have an impact on the group’s revenue. CIMB also shares the market view that there will be a second rate cut in 2020, expected in the second half of this year.

“If you look at how we address the issue in 2019, we have to relook and manage the portfolio better. The impact is marginal, we’re able to mitigate this impact through optimising some of the other investments that we want to make,” he told reporters after inking a memorandum of understanding (MoU) with the Malaysia External Trade Development Corporation (Matrade) in conjunction with Malaysia’s trade performance 2019 announcement today.

He said CIMB has to be mindful of other external shocks, such as the Wuhan coronavirus, as performance of banks are highly correlated with the country’s gross domestic product.

“We’re still looking at a positive loan growth in Malaysia. As banks, we continue to look at optimising some of the investments that we want to make to make sure our cost-to-income ratio, efficiency and productivity continue to improve because margins will be further compressed going forward for this industry,” said Zafrul.

Earlier, CIMB signed an MoU with Matrade to enhance local exporters’ capabilities in economic, environmental and social (EES) areas through a series of training for SMEs called the SMEs Sustainable Exporters Programme.

The programme, which is an initiative under Sustainability Action Values for Exporters (SAVE) campaign by Matrade, will see Matrade and CIMB joining forces to provide up to 12 training sessions for SMEs registered with Matrade.

The training sessions will begin in March 2020 and aim to train and benefit up to 400 SMEs. The training will expose SMEs to sustainability policies and practices for their businesses and operations, particularly to equip them for markets that have embraced or are moving towards the EES principles.

Zafrul said CIMB is the first bank to work with Matrade on this SME specific programme to build their EES capabilities.

“Our focus on SMEs’ sustainability is just one of the many initiatives by CIMB to become a visible shaper of and catalyst for EES practices in Asean, as outlined in our growth strategy, Forward23,” said Zafrul, adding that CIMB has allocated RM15 billion for two years for SME initiatives as part of its sustainability commitment.

The SAVE Campaign, launched in October last year, is Matrade’s five-year plan to facilitate Malaysian exporters’ move towards sustainability.

source https://www.thesundaily.my/business/cimb-to-cushion-impact-of-rate-cut-on-nim-by-optimising-investments-ME1969385