CIMB Niaga's asset quality yet to stabilize as NPL ratio rises to 3.9%

The lower loan base is partly to blame.

Niaga’s gross NPL ratio rose again to 3.90% end-Mar 2016 from 3.74% end-Dec 2015 (4.07% end-Mar 2015), though this was attributed in part to the lower loan base, since there was a contraction in loans across the board, says Maybank Kim Eng.

Here's more:

By business segment, there was a rise in corporate NPLs (to 4.6% from 4.5%), commercial NPLs (to 6.6% from 6.0%), SME NPLs (to 3.2% from 2.9%) and consumer NPLs (to 2.0% from 1.9%).

Coal and coal related NPLs continued to account for about 8.5% of total NPLs with a loan loss coverage of 70%.

Special mention loans jumped to 10.4% of total loans end-Mar 2016 versus 8.16% end-Dec 2015, as slower economic growth resulted in an increase in delayed payments. Some of the sectors impacted include manufacturing, transport, construction and textiles. Management expects the ratio to decline in 2Q16 as some of these loans will be restructured by then.

Credit costs remained elevated at 285 bps in 1Q16 versus 317 bps in 4Q15, with a weakening of collateral values. Total loan loss coverage was 116% end-Mar 2016 versus 112% end-Dec 2015.