TMB Bank, considered an earnings bellwether for the banking industry, delivered marginal 2.23% growth in its first-quarter net profit, signalling that other lenders' results may not dazzle.
The medium-sized bank posted a net profit of 1.64 billion baht after pursuing a prudent approach by setting aside provisions worth 2.39 billion compared with 1.61 billion in the same period last year to deal with economic uncertainty, it said in a statement.
TMB's pre-provision profit for the first three months surged 38.1% year-on-year to 4.32 billion baht thanks largely to a 16.6% increase in gross revenue and 5.4% reduction in operating costs.
Net interest revenue in the quarter rose by 13.2% year-on-year to 5.7 billion baht and non-interest revenue 26.1% to 2.26 billion. Its quarterly net interest margin (NIM) fell marginally to 3.13% from 3.16% in the previous quarter but rose from 2.85% in the same period last year. Lower funding costs following last month's interest rate cut gave a boost to NIM.
Its net fee and service revenue surged 48.6% year-on-year to 1.69 billion baht, supported by higher fees from mutual funds, bancassurance and credit-related operations.
TMB's performing lending grew by a mere 1.5% quarter-on-quarter to 520 billion baht, driven mainly by a 12.9% increase in medium-sized SME loans and a 1.1% rise in retail loans. Small enterprise customers declined by 4.4% and corporate loans by 0.6%, however.
The bank's total loans as of March 31 edged up 1.6% to 539 billion baht.
In the first three months, deposits rose by 1.8% from 582 billion baht at the end of December, in accordance with moderate loan growth.
The slowness of the economic recovery saw TMB’s non-performing loans (NPLs) increase by 1.1 billion baht to 19.2 billion and its NPL ratio to 3.01% from 2.85% at the end of last year. Its coverage ratio at the end of March remained strong at 150%.
TMB, Thailand’s seventh-largest bank in terms of assets, managed to keep its capital adequacy ratio at 17.8%. Of that, 10.9% was tier-one capital, higher than the Bank of Thailand’s minimum requirement of 8.5%.
"Amid the fragile Thai economic recovery, the bank is placing importance on sustainable profit growth and focusing on non-interest revenue and efficiency enhancement," the statement said. "Moreover, the bank intends to maintain the NPL coverage ratio and capital base at a high level and preserve strength of its financial position."
TMB shares closed yesterday on the Stock Exchange of Thailand at 2.88 baht, down 20 satang, in heavy trade worth 2.1 billion baht.