SCB, BAY post healthy growth
Siam Commercial Bank (SCB) delivered a 40.8% year-on-year increase in its consolidated unreviewed net profit for the three months through September, thanks to a one-off gain from selling SCB Life Assurance, while Bank of Ayudhya (BAY) saw its quarterly operating profit rise 5.8% from a year earlier.
SCB, the country's largest lender by assets, posted a net profit of 14.8 billion baht for the third quarter, compared with 10.5 billion baht in the same period last year, according to the bank's filing with the Stock Exchange of Thailand.
The one-time gain of 11.6 billion baht from divesting of SCB Life was a major contributor to earnings in the quarter, said Arthid Nanthawithaya, chairman of the executive committee and chief executive.
The bank in August announced that it had entered into a binding agreement to sell 99.2% of SCB Life to insurer FWD Group Financial Services, in Southeast Asia's biggest life insurance acquisition.
After the share sale is completed, the bank and the Hong Kong-based insurance firm, owned by a son of tycoon Li Ka-shing, will enter into a 15-year bancassurance agreement, enabling FWD to sell life insurance products through SCB.
SCB set aside additional provisions to the tune of 9.1 billion baht on top of normalised quarterly reserves of 6.2 billion baht.
"In light of domestic economic uncertainty and global economic volatility, we foresee the need to strengthen ourselves," Mr Arthid said. "The bank set aside additional provisions against potential problem loans."
Total operating income, including the one-time gain, rose by 74.1% to 60.5 billion baht, lowering the cost-to-income ratio to 29.1% in the third quarter.
SCB's consolidated non-performing loans (NPLs) climbed to 3.01% of loans outstanding at the end of September from 2.77% three months ago, reflecting the current state of the economy and prevailing economic headwinds.
NPL coverage ratio stood at 144% in the third quarter, while the bank's capital adequacy ratio remained at a record high of 18% of risk-weighted assets.
Despite moderate loan growth of 2.2% year-on-year in the three months to September, SCB's net interest income (NII) rose 7.4% year-on-year to 26.2 billion baht.
Proactive risk management and a strategy to rebalance the loan portfolio towards higher-margin products were the main reasons for the NII growth, Mr Arthid said.
Non-NII in the third quarter, excluding the one-time gain, was stable year-on-year because of the resilience of recurring fee income, especially from lending-related activities and wealth products.
For the first nine months, the bank's net profit amounted to 34.9 billion, up 5.9% from the corresponding period last year.
BAY, the country's fifth-largest lender, reported a third-quarter net profit of 6.56 billion, up 5.6% year-on-year.
The bank announced a net profit for the first nine months of 26.3 billion baht, a gain of 40.7% year-on-year, due to a 5.8% rise in operating profit.
BAY's impairment charge for credit loss amounted to 6.94 billion baht for the third quarter, up 3.2% from the previous quarter. For the nine-month period, it set aside a loan-loss provision of 20 billion baht, up 3.2% year-on-year.
For the nine-month period, the bank's net profit surged 40.7% year-on-year to 26.3 billion baht.