Malaysia's CIMB could incur losses from payments glitch: sources

Kuala Lumpur

CIMB Group Holdings' shares slumped as much as 6 per cent, set for the biggest intraday loss since March 2020, after the Malaysian bank posted a credit loss of RM280.9 million (S$90.9 million) last year due to a processing error that saw excess funds deposited in some customer accounts.

The stock dropped as low as RM5.37 at the midday break amid volume that was almost 8 times the 20-day average, data compiled by Bloomberg show. The shares were the worst performers on the main KLCI Index on Tuesday (Mar 1).

Malaysia's second-largest bank, which counts sovereign wealth fund Khazanah Nasional as its largest shareholder, discovered the problem this year that related to a third-party remittance service, group CEO Abdul Rahman Ahmad said on Monday evening, confirming a report by Bloomberg News.

The group is taking steps to recover the duplicate payments from the affected customers and an "additional and lower final provision amount may be taken in the first quarter of 2022" depending on the recovery, Abdul Rahman said while releasing the lender's fourth- quarter and full-year earnings.

Tuesday's slump in shares came even after CIMB reported net income of RM4.3 billion in 2021, its strongest annual figure since 2019.

Malaysia's central bank asked the lender to provide "reasonable options" for customers to return the excess money, Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus told reporters during a virtual briefing on Malaysia's fourth-quarter gross domestic product results on Feb 11. The central bank would take appropriate supervisory and enforcement actions on CIMB if its findings reveal any breach of legal or regulatory requirements, Shamsiah said.

CIMB's technical glitch comes as South-east Asian banks come under scrutiny over issues with their digital infrastructure. In December, about 790 customers of Singapore's OCBC Bank lost a total of S$13.7 million in scams. A month earlier, thousands of DBS Group Holdings' customers were unable to log onto its online and mobile platforms. BLOOMBERG