Bank profits underwhelm in Q1
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Bank profits underwhelm in Q1

Earnings fall among smaller players

Commercial banks booked marginal profit growth in the first quarter of this year, largely influenced by the decreased profitability of small to mid-sized banks thanks to higher provision for loan loss reserves.

Among the 11 SET-listed commercial banks, the combined net profit for the first quarter amounted to 63.9 billion baht, marking a modest 4.5% year-on-year increase. This minimal growth was dampened by the earnings downturn of middle- to small-sized banks, which had to allocate higher provisions for expected credit losses (ECLs) in the first quarter compared to the corresponding period last year to align with uncertain economic conditions.

Kasikornbank (KBank), the nation's second-largest lender in terms of total assets, stood out with the industry's highest consolidated net profit of 13.4 billion baht, reflecting a remarkable growth rate of 25.5% year-on-year in the first quarter of 2024.

According to KBank's financial statement to the Stock Exchange of Thailand (SET), its net interest income surged by 10.4% year-on-year to reach 38.5 billion baht in the first quarter, despite non-interest income declining 0.64% to 11.6 billion baht.

Among Thailand's six domestic systemically important banks (D-SIBs), Bank of Ayudhya (Krungsri) was the only one to report a decline in net profit, dropping to 7.54 billion baht in the first quarter of this year, a decrease of 13% year-on-year, primarily due to heightened expected credit losses.

Krungsri's provision for loan loss reserves in the first quarter spiked to 12.2 billion baht, marking a substantial increase of approximately 112% year-on-year, while the bank's non-performing loans (NPLs) also rose to 66.8 billion baht, a 23.7% increase from the previous year.

The six D-SIBs, including BBL -- KBank, Krungthai Bank (KTB), Siam Commercial Bank (SCB), Krungsri, and TMBThanachart Bank (ttb) -- collectively reported an increase in NPLs to 486 billion baht in the first quarter of 2024, up by 1.11% year-on-year. However, BBL, KTB, and ttb managed to reduce their NPLs, while SCB X, a holding company of SCB, maintained a flat growth rate in NPLs.

Despite the challenges, the D-SIBs collectively set aside a higher provision for expected credit losses in the first quarter of this year, totalling 55.8 billion baht, a 13.4% increase from the previous year.

Notably, both KBank and KTB allocated lower provisions for loan losses during this period, with KBank's expected credit losses decreasing by 7.94% year-on-year to 11.6 billion baht, and KTB's falling by 0.93% to 8.02 billion baht.

KTB reported a 10% increase in net profit, driven by growth in interest income under a managed loan growth from portfolio optimisation with a justified risk-adjusted return.

The bank also increased its non-interest income while prudently managing expenses, according to its financial statement to the SET.

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