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Issuer Credit Research

Issuer Flash: CIMB

Issuer Flash: CIMB

Report date: 2026-05-27 Event date: 2026-05-26 Event title: Q1 2026 Results

1. Flash Conclusion

CIMB Group Holdings Berhad's first-quarter 2026 results do not materially change the credit view set out in the latest issuer_summary. Net profit was RM1.916bn, ROE was 11.0%, the GIL ratio was 1.7%, and the CET1 ratio was 14.3%, leaving intact the investment-grade issuer credit profile described in the latest summary. At the same time, the results should not be read as a quarter of strong earnings growth, but rather as a quarter in which weaker margins were absorbed by non-interest income and cost control.

The credit read-through is neutral for the assessment of the level of credit quality, while the absence of deterioration in asset quality and capital is a comfort factor. Net interest income was weak, falling 5.0% quarter-on-quarter, but non-interest income increased 11.9% quarter-on-quarter and operating expenses declined 5.5% quarter-on-quarter, leaving net profit broadly flat versus the previous quarter. However, loan loss charge rose to 31bp, still within the full-year guidance range of 25-35bp but higher than both the previous quarter and the same period of the previous year. In 2026, the focus has shifted to whether three pressures — NIM compression, normalisation of credit costs, and capital returns — intensify at the same time.

2. What Was Announced

On 2026-05-26, CIMB announced its unaudited results for the first quarter ended 2026-03-31. The company described the results as resilient despite headwinds, supported by its Forward30 medium-term strategy, deposit base, non-interest income, and cost management.

Key figures were as follows.

Metric 1Q26 4Q25 1Q25 Interpretation
Net profit RM1.916bn RM1.920bn RM1.973bn Flat quarter-on-quarter, lower year-on-year
ROE 11.0% 10.9% 11.4% At the lower end of guidance
Net interest income RM3.683bn RM3.875bn RM3.819bn Margin pressure
NIM 2.08% 2.10% 2.16% Continued decline
Non-interest income RM1.727bn RM1.544bn RM1.680bn Offset to weaker NII
Cost-to-income ratio 47.2% 49.9% 46.9% Improved quarter-on-quarter
Loan loss charge 31bp 23bp 26bp Within guidance but higher
GIL ratio 1.7% 1.7% 2.2% Stable
CET1 ratio 14.3% 14.3% 14.7% Above target
Loan-to-deposit ratio 86.6% 86.4% 88.9% Deposit-led funding maintained
CASA ratio 43.3% 42.7% 43.8% Improved quarter-on-quarter

The company maintained its full-year 2026 guidance. However, ROE is at the lower end of guidance, and the cost-to-income ratio of 47.2% is slightly above the target. From 2Q onward, the key issue will be how far CIMB can absorb NIM compression and credit costs.

3. Credit Read-Through

The first and most important point is how to read NIM. Group NIM was 2.08%, down 2bp quarter-on-quarter and 8bp year-on-year. The company referred to signs of bottoming in some markets, but the group-level figure is still declining. From a credit perspective, the question is less whether NIM recovers immediately and more whether earnings and capital can be protected even if NIM remains weak.

Non-interest income and cost management supported the quarter. However, markets- and FX-related income can be volatile from quarter to quarter. 1Q26 was a result in which breadth of revenue sources helped, not a result driven by strong growth in underlying banking income.

Asset quality continues to support the credit view for now. The GIL ratio was stable at 1.7%, while allowance coverage was 101.8% excluding regulatory reserves and 133.7% including them. On the other hand, loan loss charge increased to 31bp. This is not yet a warning level, but it needs to be monitored to determine whether it marks the beginning of credit-cost normalisation.

Capital and funding also do not materially change the view in the latest summary. The CET1 ratio was 14.3%, above the company target, while the CASA ratio was 43.3% and the loan-to-deposit ratio was 86.6%. Capital return remains a monitoring item carried over from the latest summary. The 1Q26 press release also referred to a capital return programme of up to RM2bn and the sale of CIMB Thai's auto finance portfolio as part of capital allocation. These are not new negative factors specific to 1Q26, but if capital returns become too aggressive, they could reduce loss-absorption buffers.

From the perspective of holding-company debt, the results confirm the stability of the group as a whole, but they do not remove the issue of structural subordination. In evaluating individual bonds, investors should continue to distinguish between holding company, bank subsidiary, senior, Tier 2, and AT1 instruments.

4. What To Watch Next

First, whether NIM compression is truly bottoming. In 2Q26, the key items to check will be the combination of deposit costs, loan yields, CASA ratio, and asset growth. If NIM approaches flat and the decline in net interest income stops, that would be a comfort factor for the credit view.

Second, it is necessary to assess whether the rise in credit costs is temporary or structural. The GIL ratio is still stable, but loan loss charge has increased. This is not a major issue as long as it remains within the company's target range, but if credit costs overshoot at the same time as NIM declines, pressure on earnings and internal capital generation will increase.

Third, the distance between capital returns and CET1 should be monitored. The 1Q26 CET1 ratio of 14.3% is above the company target, but the buffer is not extremely thick. The sale of CIMB Thai's assets may improve capital efficiency, while the earnings capacity of the Thai business, the timing of capital repatriation, and the net impact on CET1 remain points to check in subsequent periods.

Finally, the quality of non-interest income needs to be assessed. In 1Q26, markets- and FX-related income provided support, but this should not be assumed to recur in the same way every quarter. The credit view in the latest summary is maintained, but investors should look beyond headline profit and track the combination of margins, credit costs, and capital returns.

5. Sources