Bangkok Bank Plc reported an 11.6% drop in first-quarter net profit, from a year earlier as a surge in bad debt prompted it to book higher loan loss provisions.
Net profit at 8.32 billion baht for the January-March quarter was however slightly higher than an average forecast of 8.25 billion baht in a Reuters poll. Profits rose 8.3% from the previous quarter, the bank said in a statement Tuesday.
Non-performing loans (NPLs) jumped 30% from a year earlier to 62 billion baht, the highest level since 2007, pushing the bank's bad debt ratio up to 2.9% of total lending at the end of March, up from 2.8% at end December, it said.
Bangkok Bank aims for loan growth of 3%-5% this year but saw loan growth of only 0.3% in the quarter, while its provisions increased by 22%.
The banking sector has suffered from sluggish loan demand and rising bad debt as weak exports and subdued domestic demand drag on Southeast Asia's second-largest economy. Last month, the central bank cut its 2016 growth forecast to 3.1% from 3.5%.
Tracking other major banks, Bangkok Bank cut its minimum lending rate on April 5 to help boost the economy. Analysts say the rate cut is likely to drag on the bank's net interest margin and profits from the second quarter.
On Tuesday, two mid-sized banks, TMB Bank and Thanachart Bank recorded double-digit growth in their unreviewed earnings for the first quarter, driven mainly by lower loan-loss provisions.