Banks see double-digit dip in profit as NPLs advance
Institutions beef up loan provisions
Both the third-quarter and nine-month net profit of major SET-listed financial institutions saw a double-digit decline on a year-on-year basis as banks beefed up loan provisions to cushion against higher bad debt prospects.
Kasikornbank (KBank), the country's largest commercial lender by total assets, and its subsidiaries reported third-quarter net profit of 6.67 billion baht, down 32.9% year-on-year.
The bank's net profit for the first nine months was 16.2 billion baht, down 45.8% year-on-year.
For the nine-month period, KBank's net profit tumbled mainly because it set aside a higher expected credit loss from the preceding period of 17.7 billion baht, or 70.2%, under prudent consideration of factors such as uncertainties based on economic contraction from the outbreak.
The bank also complied with the Bank of Thailand's measures to support customers affected by the pandemic.
As of Sept 30, gross non-performing loans (NPLs) stood at 3.95%, up from 3.65% logged at year-end 2019, while the coverage ratio stood at 161%, up from 149% in December.
KBank's capital adequacy ratio (CAR) was registered at 18.5%, with a tier-one capital ratio of 15.7%.
Bangkok Bank (BBL), the second largest commercial bank by total assets in Thailand, and its subsidiaries announced net profit for the third quarter of 4 billion baht, down 57.4% year-on-year.
For the first nine months, BBL's net profit, including the net profit of PT Bank Permata Tbk, an Indonesian bank acquired by BBL, tallied 14.8 billion baht, down 46.9% year-on-year.
At the end of September, the bank's loans amounted to 2.36 trillion baht, an increase of 0.6% from the end of June, attributed to an increase in loans to businesses and consumer loans.
The ratio of NPLs was 4.1%, while the ratio of loan-loss reserves was 178%.
BBL's CAR was at 17.6%, of which 15.1% was attributed to tier-one capital.
Krungthai Bank (KTB), the third largest bank, reported third-quarter net profit of 3.05 billion baht, down 51.8% year-on-year, and booked a nine-month net profit of 13.3 billion, down 39.2% year-on-year.
KTB projected credit losses of 35.6 billion baht for the nine-month period, including full provision for one of its large corporate customers operating in the public utilities and services as well as transport sectors.
This was an 87.7% increase from impairment loss from loans in the same period of 2019.
As of September, the coverage ratio increased to 136%, up from 132% at the end of last year.
Gross NPL ratio declined to 4.21% from 4.33% at year-end 2019. KTB's CAR was 18.4%, of which 15.0% was tier-one capital.
Siam Commercial Bank (SCB), the fourth largest bank, recorded net profit of 4.64 billion baht in the third quarter, down 68.6% year-on-year, with a nine-month net profit of 22.3 billion, down 36.3% year-on-year.
The lower net profit was attributed to higher loan-loss provisions to safeguard against the prospect of rising NPLs amid the persistent pandemic crisis.
SCB's NPL ratio increased to 3.32% from 3.05% at the end of June, but declined from 3.41% at the end of December.
The quarter-on-quarter increase in NPLs mainly came from qualitative downgrades for loans under the debt relief programme, as well as from the NPL formation.
The bank's coverage ratio was 146% in September, with the CAR at 18.7% with 17.6% tier-one capital.