CIMB's SME banking performance in Southeast Asia in 2025 was shaped less by balance-sheet growth and more by transaction capture, deposit stability and cash-flow visibility. The bank's approach, as explained by Lawrence Loh, co-CEO, Group Commercial & Transaction Banking, is centred on an integrated commercial and transaction banking model, cash-flow-based financing and digitally enabled engagement across its core ASEAN markets.

Small and medium-sized enterprises (SMEs) across Southeast Asia entered 2025 facing persistent pressure on operating margins. Rising input costs, labour availability constraints and intensifying competition affected cash-flow stability, particularly for micro and small enterprises. These conditions shaped how SME banking activity evolved during the year, with banks required to engage more closely with transaction flows, liquidity management and working capital usage rather than relying solely on traditional term lending.

CIMB’s SME banking franchise spans Malaysia, Indonesia, Singapore, Thailand and Cambodia, with Malaysia accounting for the largest share of customers and balances. Indonesia represents the second-largest SME market for the group, while Singapore, Thailand and Cambodia operate at smaller scale but remain connected through CIMB’s regional commercial and transaction banking platform. Together, these markets define the operating footprint of CIMB’s Group Commercial and Transaction Banking business.

Lawrence Loh, Co-Chief Executive Officer, Group Commercial & Transaction Banking, explained that CIMB structures commercial banking and transaction banking as a single integrated franchise. Payments, collections, cash management and trade services form the primary engagement layer with SME customers, while lending is designed to follow observed transaction activity rather than act as the initial point of relationship entry.

In operational terms, Loh noted that CIMB Commercial Banking serves approximately 450,000 customers across Malaysia. The business is supported by more than 200 branches and over 25 commercial banking and SME centres, complemented by dedicated SME relationship teams. This physical infrastructure is paired with digital servicing to support SMEs across different stages of business development and geographic locations.

CIMB’s SME segmentation and market presence

CIMB’s SME banking activity is organised around a segmentation framework that reflects the composition of the Malaysian business landscape. Micro enterprises represent approximately 70% of registered businesses, small enterprises account for about 28%, while medium enterprises make up less than 2%. Collectively, SMEs represent more than 96% of registered firms, shaping the scale and diversity of demand for banking services.

Loh explained that the defining boundary between retail and SME banking is registration with Suruhanjaya Syarikat Malaysia (SSM), the Companies Commission of Malaysia. Sole proprietors and incorporated entities that are formally registered are onboarded into the SME franchise, while unregistered individuals participating in the gig economy remain within retail banking. This distinction allows CIMB to apply differentiated compliance, risk and servicing models while still engaging businesses early in their operating lifecycle.

Sectoral distribution is concentrated in services, construction and manufacturing, which together account for more than half of CIMB’s SME customer base. These sectors typically exhibit high transaction volumes, frequent payment cycles and working capital needs that fluctuate with project timelines and order flows. As a result, transaction banking services such as collections, payments and cash management are positioned as core components of the SME relationship.

Geographically, Loh pointed to the Klang Valley, Johor and the Northern Corridor as the primary centres of SME activity in Malaysia. These regions benefit from population density, industrial clusters and proximity to trade routes, which generate sustained demand for banking services linked to domestic and cross-border transactions. A notable example is CIMB’s commitment of MYR 10 billion (about $2.2 billion) in funding facilities to accelerate development of the Johor–Singapore Special Economic Zone (JS-SEZ). CIMB maintains extensive coverage in these regions through a combination of branches, commercial banking centres and relationship teams.

In East Malaysia, the operating environment differs due to distance, infrastructure constraints and a more dispersed SME base. Loh explained that CIMB balances physical access with digital engagement in these regions, recognising that service effectiveness depends on transaction connectivity rather than branch density alone. This approach allows CIMB to maintain SME coverage across the country while managing operating efficiency.

Challenges and innovations in SME banking

The SME operating environment in 2025 was characterised by structural challenges rather than short-term volatility. Rising operating costs, including raw materials, logistics and compliance-related expenses, continued to compress margins, particularly for micro and small enterprises. Labour constraints further affected operating capacity, with wage pressures and worker availability impacting cash-flow predictability.

Loh also referred to increased competitive pressure from foreign enterprises expanding across Southeast Asia, particularly businesses originating from China. These firms often opened multiple outlets simultaneously and leveraged technology-enabled operating models, intensifying price competition in sectors such as retail, food and services. For local SMEs operating one or two outlets, this reduced pricing flexibility and shortened the margin buffer available to absorb cost increases.

Access to financing remained a recurring issue. Loh noted that traditional SME lending models typically require at least twelve months of operating history, formal financial statements and collateral, while imposing fixed monthly repayments. These structures often do not align with the revenue patterns of early-stage or seasonal businesses, particularly those with daily or irregular receipts.

In response, CIMB introduced cash-flow-based lending solution for SMEs, FlexiCash, designed around observed transaction behaviour rather than balance-sheet proxies. Facilities are underwritten based on approximately three to six months of daily receipts flowing through CIMB accounts. Financing amounts range from MYR 5,000 to MYR 150,000 (about $1,100 to $33,000), with tenures of up to nine months and no collateral requirements.

Repayments are structured to occur only on days when income is recorded, with no deductions on non-operating days. Loh explained that this design allows repayment obligations to move in line with business activity, addressing cash-flow volatility while maintaining credit discipline. The cash-flow based financing program was launched in October 2025.

CIMB’s digital strategy and value proposition

Digital execution underpins CIMB’s SME engagement model. Loh described digital channels not as standalone utilities, but as platforms through which transaction data, usage patterns and customer behaviour are integrated into day-to-day banking interactions. This allows CIMB to engage SMEs within the context of their operating activity rather than through periodic reviews.

These capabilities are delivered through CIMB OCTO Biz, the group’s digital banking platform for SMEs. As at November 2025, OCTO Biz had onboarded approximately 231,000 SME customers, processed more than 11 million transactions, and facilitated transaction values of around MYR 23 billion (about $5.1 billion). Loh noted that SMEs using the platform experienced a reduction of about 40% in time spent on daily banking tasks and a reduction of about 30% in the number of steps required to complete payment transactions.

Digital onboarding forms a key part of the acquisition strategy. CIMB launched fully digital business account opening for sole proprietors in December 2025, enabling instant account activation through electronic know-your-customer verification without the need for branch visits. Loh explained that this capability is expected to materially increase onboarding capacity as it is progressively extended to additional SME segments.

CIMB also embedded digital financing application capabilities within its SME platform. Through SME Instant Apply, SMEs can submit financing applications electronically.

Artificial intelligence (AI) is deployed internally to support service delivery. Loh described the use of a generative artificial intelligence (GenAI) copilot within CIMB’s business contact centre to assist agents with responses and information retrieval. During the pilot phase, the system achieved high accuracy rates and reduced average call handling time by approximately 30%, improving service consistency while operating within regulatory constraints.

CIMB’s financial performance and government initiatives

Loh outlined CIMB’s SME financial performance in 2025 by first referring to loan growth and portfolio composition rather than headline balance sheet expansion.

A key feature of the loan book over this period was the deliberate shift towards working capital financing. Loh explained that approximately 50% of SME loans disbursed were structured as working capital facilities rather than asset-backed term financing. This shift reflected the operating realities of SMEs facing volatile input costs and uneven revenue flows, where liquidity flexibility was prioritised over long-term asset acquisition.

Funding performance was a central reference point in the discussion. In 2025, SME CASA balances grew by approximately 9% year on year, while overall commercial banking CASA balances grew by about 7%. Loh noted that this represented the strongest growth in non-retail deposits since calendar year 2022 and was driven primarily by Sendirian Berhad (private limited company) customers rather than short-term pricing incentives.

This funding profile supported a loan-to-deposit ratio of approximately 83% for the SME and commercial banking portfolio. Loh explained that maintaining this level was important for balance-sheet resilience and funding cost management, particularly in an environment where interest rates and funding competition remained elevated.

Asset quality was another area Loh highlighted. Since 2022, CIMB’s SME non-performing loan (NPL) ratio has remained consistently below the industry average. He explained that this outcome was supported by conservative underwriting standards, active monitoring and the increasing use of transaction data to assess ongoing repayment capacity rather than relying solely on static financial statements.

CIMB’s SME product offerings and customer journey

CIMB’s SME proposition spans operating accounts, cash management, working capital financing, trade finance, foreign exchange, business credit cards and multi-currency accounts. Loh explained that these products are delivered through a single commercial and transaction banking platform rather than as discrete, unconnected offerings, allowing SMEs to manage day-to-day operations within a consolidated banking environment.

One area of focus in 2025 was the expansion of business wealth services for SMEs. Loh described the establishment of a dedicated business wealth team, supported by more than 50 business wealth managers, to address the financial needs of business owners beyond operating liquidity. This included a shift in internal mindset from deposit gathering alone towards a broader understanding of business owners’ personal and business financial flows.

Multi-currency accounts formed part of this broader proposition. Loh referred to the rollout of multi-currency account and multi-currency account-i (i.e. Shariah-compliant) offerings, which allowed SMEs to hold and transact in multiple currencies within a single account structure. These accounts supported cross-border trade and reduced foreign exchange friction for SMEs engaged in import and export activities.

The SME customer journey was also shaped by data-driven engagement. Loh explained that transaction data is used to generate contextual prompts and nudges within digital channels, enabling CIMB to engage SMEs based on actual usage patterns rather than generic product campaigns. This approach allowed interactions to be timed around operating needs such as payment cycles, supplier settlements or liquidity gaps.

Value-added services were positioned as part of the broader journey rather than standalone products. Loh referred to integrations with accounting software, merchant acquiring services and payroll solutions, which reduce operational burden for SMEs while increasing transaction visibility within the banking relationship. These services were designed to support day-to-day operations rather than act as revenue drivers in isolation.

CIMB’s role in government programmes and environmental, social and governance initiatives

CIMB plays a significant role in government-supported SME financing programmes. Loh emphasised that asset quality performance under these schemes has been a key factor in sustaining participation over time.

CIMB’s role in government initiatives extends beyond financing. Loh referred to the bank’s appointment as a cash mandate bank for the BUDI95 fuel subsidy programme in Malaysia, which involved managing payment flows linked to fuel subsidies. Following this appointment, CIMB introduced a dedicated petrol dealer package covering payments, collections and financing.

Under this programme, approximately one in four petrol dealers approached expressed interest in CIMB’s proposition. Loh explained that this engagement embedded CIMB into a national SME ecosystem, generating transaction activity while supporting government policy objectives related to subsidy distribution and cash-flow transparency.

Environmental, social and governance-related financing expanded materially during the year. These loans supported activities such as factory retrofitting, energy efficiency upgrades and automation initiatives undertaken by SMEs.

In the JS-SEZ, Loh explained that loans were linked to infrastructure development, manufacturing and cross-border supply chain activities associated with the zone.

CIMB’s future plans and digital transformation

Looking ahead, Loh described CIMB’s focus on further automation and digitisation across its commercial and transaction banking operations. Manual processes within SME banking are being progressively replaced with digital self-service capabilities to improve efficiency and turnaround times.

One initiative discussed was the development of a new trade platform that will allow SMEs to apply for bank guarantees online. Loh explained that this platform is intended to reduce reliance on physical documentation and branch visits while standardising execution across markets.

CIMB is also modernising its cash management platform. Loh referred to the replacement of the back-end trade system, which is expected to enhance system resilience, scalability and functional extensibility. This upgrade supports higher transaction volumes and more complex trade workflows.

Data analytics and artificial intelligence will continue to play a supporting role in SME engagement and service delivery. Loh explained that these technologies are being deployed within regulatory boundaries to improve response accuracy, consistency and operational efficiency rather than to replace relationship management.

These initiatives are being implemented incrementally, with a focus on operational stability and customer experience rather than rapid feature expansion. Loh emphasised that digital transformation within SME banking requires careful sequencing to ensure reliability and adoption.

New operating model

Loh described CIMB’s SME banking proposition as one that integrates commercial banking and transaction banking into a single operating model. Payments, collections, cash management and trade services form the foundation of SME relationships, with financing structured to follow observed transaction behaviour rather than act as the initial point of engagement.

Across its core ASEAN markets of Malaysia, Indonesia, Singapore, Thailand and Cambodia, CIMB’s SME banking activity in 2025 was conducted at scale, supported by a large customer base, nationwide physical infrastructure and digital platforms. Malaysia remained the largest market by balances and customers, with other markets contributing to regional connectivity.

Performance during the year was assessed through a combination of funding growth, asset quality and transaction activity. Loh referred to strong growth in non-retail CASA balances, a loan-to-deposit ratio maintained in the low-80% range and non-performing loan ratios that remained below industry levels.

Product development and digital execution were directed towards reducing friction in day-to-day SME banking activity. Digital onboarding, cash-flow-based lending and platform-based servicing were positioned to address operational realities rather than abstract growth targets.

Looking ahead, Loh explained that CIMB’s focus remains on deepening transaction visibility, expanding digital capabilities and supporting SMEs through working capital solutions, government programmes and environmental, social and governance initiatives, while maintaining balance-sheet discipline and operational resilience.