Listed banks post net profit decline of 23% for 2020

Listed banks post net profit decline of 23% for 2020

Decrease attributed to the rise in ECLs

Large SET-listed commercial banks posted a decline of more than 23% in net profits last year, mainly attributed to allocation of higher amounts of expected credit losses (ECLs) to cushion against rising uncertainties amid the pandemic crisis.

Kasikornbank (KBank) and its subsidiaries reported total net profit of 29.5 billion baht last year, a decrease of 9.24 billion or 23.9% year-on-year.

The reduction is mainly due to setting aside higher ECLs in preparation for uncertainties from the prolonged pandemic, said chief executive Kattiya Indaravijaya in a statement to the Stock Exchange of Thailand (SET).

KBank, the largest commercial lender by assets in Thailand, set aside ECLs of 43.6 billion baht, up 23.9% year-on-year, to cover potential damage from the weak economy.

The bank set aside higher ECLs since the first half of 2020, making the ECL amount allocated in the final quarter lower than previous quarters.

As of Dec 31, KBank and its subsidiaries registered total assets worth 3.65 trillion baht, up by 365 billion or 11.1% from 2019, with the majority from loans.

Its gross non-performing loan (NPL) ratio stood at 3.93% at the end of last year, up from 3.65% in 2019, largely attributed to the Covid-19 impact.

KBank and its subsidiaries' capital adequacy ratio according to the Basel III Accord was at 18.8%, with a tier-1 capital ratio of 16.1%.

For Bank of Ayudhya (BAY) and its subsidiaries, 2020 net profit stood at 23.0 billion baht, a decline of 9.7 billion or 30% year-on-year.

"This was driven by lower operating profit in the absence of extraordinary items recorded in 2019 and a higher provision corresponding to higher ECLs," according to BAY's statement to the SET.

BAY, the fifth largest commercial lender by total assets, allocated total ECLs throughout 2020 of 36.6 billion baht, of which 10.6 billion were set aside in the final quarter.

Given the ongoing uncertainty pertaining to the fragile economic recovery caused by the pandemic, especially the resurgence of Covid-19 cases in December, the bank decided to set a stronger buffer to cushion against higher risks.

BAY's gross NPL ratio stood at 2% at year-end 2020, up from 1.98% at year-end 2019.

The bank's loan coverage ratio increased to 175% at the end of 2020 compared with 164% at year-end 2019.

TMB-Thanachart Bank (TMB-TBank) and its subsidiaries announced total net profit of 10.1 billion baht in 2020, up 40% year-on-year on the back of the merger between TMB and TBank.

With improved results, the merged bank raised its provisions further, although the NPL ratio remained relatively low, said chief executive Piti Tantakasem.

As of December 2020, the bank's NPL ratio was registered at 2.5% compared with 2.35% in the previous year.

The majority of customers, who exited the debt relief programme, could resume normal loan repayment.

TMB-TBank expects the fresh Covid-19 outbreak to put pressure on customers' debt servicing ability going forward.

The bank decided to raise its provision level significantly given strong operating results.

The loan coverage ratio, which indicates risk cushion, rose to 134% in 2020 from 120% in 2019.

In 2020, the bank's total loan portfolio was recorded at 1.39 trillion baht, relatively flat from the previous year because of slow growth of new loans and changes to the loan structure to improve portfolio quality by reducing the unsecured loan portion.

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