Siam Commercial Bank's unaudited consolidated net profit tumbled 23% year-on-year in the fourth quarter of 2018, largely due to a decline in non-interest income and higher loan-loss provisions and expenses related to SCB's transformation scheme.
The bank also warned of higher impairment charges for credit losses this year.
The country's second-largest bank by assets posted a net profit of 7.08 billion baht for the three months to December, down 32.6% from the previous quarter, according to the bank's statement.
The bank is the first of the country's four largest players to submit an earnings report.
Net interest income rose 4.7% year-on-year to 24.8 billion baht, while non-interest income, of which fee-based income is a part, fell 15.8% from a year earlier to 8.98 billion.
SCB's loan-loss provisions set aside in the final quarter surged 18.4% on the same period last year to 8.87 billion baht.
"With a view of macroeconomic uncertainty and heightened volatility expected in 2019, together with a future shift in the bank's loan portfolio towards unsecured products and digital lending, the bank will be more vigilant in conducting business," SCB said.
Given potential macroeconomic headwinds and the bank's business direction, SCB's credit cost is expected to be in the range of 115-135 basis points in 2019, slightly above last year's 115 basis points.
The non-performing loan (NPL) coverage ratio rose to 147% at the end of 2018, compared with 137% a year earlier.
The bank's consolidated NPLs jumped 7.4% to 70.4 billion baht, while its gross NPL ratio increased by 0.02 percentage points to 2.85% at the end of 2018.
SCB's cost-to-income ratio climbed by 2.8 percentage points to 47.7% in the fourth quarter and 4.5 percentage points to 46.8% in 2018.
"Higher expenses associated with investment in the Transformation Program over the past three years raised the bank's cost-to-income ratio to 46.8%," the bank said. "The higher cost-to-income ratio is within the expected range of 45-47% and will steadily come down as the benefits from the Transformation Program kick in, starting from 2019."
For all of 2018, SCB's net profit fell 7.1% to 40.1 billion baht.
Separately, state-owned Government Savings Bank (GSB) aims to add 200,000 financial service points in the first quarter through banking agents and virtual branches to the existing 13,000.
Collaborations to appoint Village Funds, fintech companies and non-bank financial institutions as GSB banking agents is on the cards, said president and chief executive Chatchai Payuhanaveechai.
There are 13,000 service points, which include the networks of two banking agents, Counter Service and Thailand Post.
The bank targets 6% lending growth to 96.2 billion baht, 4% growth in deposits to 94 billion baht and 4.5% growth in total assets to 2.83 trillion baht.
Mr Chatchai said the number of users for digital banking app MyMo are projected to reach 8 million, while NPLs will be capped at 3% of loans outstanding this year.
He said the bank posted a net profit of 36.3 billion baht last year, largely driven by net interest income of 64 billion baht and fee and service income amounting to 7.9 billion baht.