Rising interest rates boosted banks' earnings in the first half with more than 15% net profit growth.
However, the big five players booked flat loan growth for the first six months of the year.
The 10 SET-listed commercial banks reported consolidated net profit for the first half of 2023 at 121.9 billion baht, up 15.2% year-on-year.
However, the country's five largest lenders -- Bangkok Bank (BBL), Kasikornbank (KBank), Krungthai Bank (KTB), Siam Commercial Bank (SCB) and Bank of Ayudhya, under the marketing name of Krungsri -- booked aggregate loan growth of 12.1 trillion baht as of June 2023, up by 0.3% from December 2022.
BBL, the country's largest lender by total assets, and its subsidiaries reported net profit in the first half of 21.4 billion baht, up 52.2% year-on-year as a result of a 36% increase in net interest income (NII) due to higher yields on earning assets, the bank said in a statement to the Stock Exchange of Thailand (SET).
KBank chief executive Kattiya Indaravijaya said in the statement that the rising interest rate resulted in NII growth of 12.2% in the first half of this year compared with the same period last year, and the growth rate also supported new loan expansion.
However, KBank, the second largest player, and its subsidiaries reported a net profit of 21.7 billion, which was 1.22% lower than the same period last year due to a higher than expected credit loss (ECL).
One of KBank's large corporate customers, whose credit has deteriorated since the first quarter of 2023, and ECL that has been reserved, were already classified as credit impaired loans in this quarter.
ECL in the first half of 2023 increased by 32.7%, year-on-year.
Krungsri posted consolidated net profit of 17.1 billion baht in the first half, up 12.1% year-on-year, driven by both NII and non-interest income, and supplemented by initial revenue streams from acquired businesses overseas in the second quarter of 2023, Krungsri chief executive Kenichi Yamato said in a statement.
SCB X, the holding company of SCB, announced consolidated net profit of 22.8 billion baht for the first quarter of this year, up 13.8% year-on-year, due to higher NII, despite higher ECL and operating expenses.
Kasikorn Research Center forecasts earnings of the banking industry would be pressured by economic uncertainty in the second half of this year.
Given economic uncertainty, loan expansion of banking sector is expected to be moderate in the second half and put pressure on NII despite the rising interest rate in line with the central bank's policy normalisation.