Siam Commercial Bank (SCB) posted a 6.7% lower net profit year-on-year for the second quarter as the waiver of online transaction fees took a bite out of its bottom line.
The bank's unaudited consolidated net profit for the three months through June amounted to 11.1 billion baht, down 2.2% from the first quarter, SCB said in a statement.
An increase in net interest income and decline in loan loss impairment failed to offset lower net non-interest income.
The country's second-largest bank by assets recorded net interest income of 23.8 billion baht for the April-to-June quarter, up 4.7% year-on-year and 2.2% quarter-to-quarter. The bank's non-interest income fell 12.9% year-on-year and 6.2% from the previous quarter to 10.5 billion baht.
SCB made a surprise push into digital banking by eliminating transaction fees over digital channels for cross-area and interbank fund transfers, bill payment, top-ups and cardless money withdrawals.
The no-fee service has been in place since March 26. The move compelled other banks to follow suit.
The investment in new technology platforms as part of the bank's transformation programme and digital acquisition activities has led to a rise in operating expenses and was also blamed for the lower net profit.
"Total operating expenses in the second quarter increased by 10.7% year-on-year, mainly from investments in major transformation projects, new technology platforms and digital acquisitions, resulting in a decline in net profit," the bank said.
The bank's loan loss provision for the second quarter fell 0.1% from a year earlier to 5 billion baht, which further strengthened its bad loan coverage ratio to 143.5%.
SCB's consolidated non-performing loans surged 10% year-on-year to 67.4 billion baht, while its gross NPL ratio rose a mere 0.16 percentage point to 2.81% at the end of June. For the first half, the bank's net profit dropped 5.7% year-on-year to 22.5 billion baht.
The bank also said that SCB Easy, its mobile banking app, has 7 million users and that by the end of the year the figure is set to hit 9-10 million. The number of merchants using QR code payments is also expected to grow to 1.2-1.5 million.
Free digital transactions did not deal a net profit blow to Bangkok Bank (BBL) and Bank of Ayudhya (BAY) in the second quarter.
BBL's net profit soared 14.3% year-on-year to 9.19 billion baht, thanks largely to a 6.1% and a 19.1% increase in net interest and net non-interest income, respectively, the bank said in a statement.
The higher net non-interest income could be attributed to the rise in foreign exchange and investment gains, and service income from bancassurance and mutual fund sales.
BAY's unaudited consolidated second-quarter net profit rose by 6.8% from a year earlier to 6.27 billion baht, largely because of the increase in both net interest and net non-interest income, according to the bank's filing with the Stock Exchange of Thailand.
The bank's net interest income surged 9.1% year-on-year to 18.5 billion baht for the April-to-June period, and net non-interest income jumped by 13.6% to 8.43 billion.
But the country's fifth-largest lender by assets saw its net non-interest income fall 4.9% from the first three months.
The bank's quarterly net fee and service income, which is a part of net non-interest income, totalled 5.19 billion baht, up 11.8% from a year earlier but down 2.5% from the previous three months.
The bank's transactional fees for the three months to June accounted for 10% of the fee and service income, down from 11% in the preceding quarter.
The bank's net interest margin rose to 3.72% in the second quarter from 3.67% in the previous quarter.
For impairment charges, the bank set aside 6.4 billion baht during the second quarter, up 17.7% year-on-year.
BAY's consolidated NPLs fell to 37.4 billion baht at the end of June from 37.6 billion at the end of last year. The bank's gross NPL ratio over the same period also dropped to 2.02% from 2.05%.
Between January and June, the bank's net profit jumped 8.4% year-on-year to 12.5 billion baht.
BAY said its full-year loan growth was expected at 8-10%, exceeding its previous estimate of 6-8%, after raising Thailand's growth forecast to 4.7% from 4%.
The bank's outstanding loans surged 5.9% from the end of December to 1.64 trillion baht, driven by a 6.7% rise in retail loans and 4.8% and 6.4% hikes in corporate and small and medium-sized enterprise loans, respectively.