Malaysia’s CIMB Could Incur Losses From Payments Glitch, Sources Say
(Bloomberg) -- CIMB Group Holdings Bhd.'s shares slumped as much as 6%, set for the biggest intraday loss since March 2020, after the Malaysian bank posted a credit loss of 280.9 million ringgit ($67 million) last year due to a processing error that saw excess funds deposited in some customer accounts.
The stock dropped as low as 5.37 ringgit per share at the midday break amid volume that was almost eight times the 20-day average, data compiled by Bloomberg show. The shares were the worst performers on the main KLCI Index on Tuesday.
Malaysia's second-largest bank, which counts sovereign wealth fund Khazanah Nasional Bhd. as its largest shareholder, discovered the problem this year that related to a third-party remittance service, Group CEO Abdul Rahman Ahmad said 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.
Strong Earnings
Tuesday's slump in shares came even after CIMB reported net income of 4.3 billion ringgit ($1 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 Southeast Asian banks come under scrutiny over issues with their digital infrastructure. In December, about 790 customers of Singapore's Oversea-Chinese Banking Corp. lost a total of S$13.7 million ($10.1 million) in scams. A month earlier, thousands of DBS Group Holdings Ltd.'s customers were unable to log onto its online and mobile platforms.
©2022 Bloomberg L.P.
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