Banks' net profit trends lower

Banks' net profit trends lower

Operating expense identified as the culprit while bad loans climb slightly

Nine SET-listed banks' aggregate net profit for the second quarter was a tad lower than a year earlier as higher interest income and lower impairment costs almost offset increases in operating expense, while almost all banks saw an uptick in bad loans.

The nine commercial banks' combined quarterly net profit fell 0.04% from a year earlier to 52.4 billion baht, according to filings with the Stock Exchange of Thailand (SET).

The nine are Siam Commercial Bank (SCB), Kasikornbank (KBank), Bangkok Bank (BBL), Krungthai Bank (KTB), Bank of Ayudhya (BAY), Thanachart Bank, Tisco Financial Group (Tisco), Kiatnakin Bank (KKP) and CIMB Thai Bank (CIMBT).

TMB Bank and LH Financial Group are due to release their quarterly earnings on Monday.

KBank's unreviewed consolidated net profit fell 8.9% from the same period last year to 9.93 billion baht in the second quarter because of the increase in operating expense and a decline in non-interest income.

The country's second-largest lender by assets saw non-interest income dip by 16% from a year ago to 13.6 billion baht in the second quarter, and operating expense rose by almost 6% to 17.7 billion baht in the same period, KBank said in a filing with the SET.

Net interest income amounted to 25.8 billion baht for the three months to June, compared with 24.4 billion baht a year earlier.

The bank's loan-loss provision set aside for the April-to-June quarter was 7.55 billion baht, down from 8 billion baht for the corresponding period last year.

KBank's gross non-performing loans (NPLs) inched higher to 3.4% of loans outstanding at the end of June from 3.34% at the end of last year.

For the January-June period, the bank's net profit fell 7.9% from a year earlier to 20 billion baht.

SCB's second-quarter net profit fell 1.2% year-on-year to 11 billion baht.

The bank's softer net profit was attributed to a 5.6% increase in operating expenses to 16.7 billion baht and a 18% surge in loan-loss provision to 5.91 billion baht.

SCB's cost-to-income ratio edged up 0.3 percentage points to 46.2% for the second quarter.

The bank's net interest income jumped by 7.1% year-on-year to 25.5 billion baht for the three months to June, and net non-interest income edged up 0.1% to 10.5 billion.

SCB's gross NPL ratio, however, fell to 2.77% at the end of June from 2.85% at the end of 2018.

First-half net profit slumped 10.4% from a year earlier to 20.1 billion baht.

Unlike KBank and SCB, BBL and KTB managed to deliver a higher net profit for the second quarter.

BBL's quarterly net profit rose by 1.7% year-on-year to 9.35 billion baht, thanks to a 15.1% drop in loan-loss provision to 5.55 billion baht and a 0.4% increase in net interest income to 17.6 billion baht.

Non-interest income totalled 13.5 billion baht for the second quarter, down 1% from a year earlier.

The bank's non-interest margin inched up to 2.36% in the second quarter from 2.33% a year earlier.

Consolidated NPL was 3.5% of loans outstanding, compared with 3.4% at the end of 2018.

For the six months to June, BBL's net profit rose by 1% to 18.4 billion baht.

BAY was the best performer among industry peers in the second quarter, with a 11.8% year-on-year surge in net profit.

CIMBT was the worst performer among peers for the three months to June. Quarterly net profit plunged 45% to 105 million baht, largely due to a 806-million-baht loss on financial liabilities designated at fair value.

The bank's net fee and service income fell to 480 million baht in the second quarter from 513 million a year earlier, while net interest income rose 3.4% year-on-year to 2.73 billion baht, CIMBT said in a filing with the SET.

CIMBT's impairment charge for loan losses during the April-to-June quarter fell sharply to 685 million baht from 1.22 billion baht a year earlier.

Gross NPL ratio climbed to 4.5% at the end of June from 4.3% at the end of 2018.

For the first six months, CIMBT's net profit surged 19.4% year-on-year to 430 million baht.

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