Six SET-listed commercial banks' net profits fell in the first quarter, with the two largest lenders posting softer earnings as weaker non-interest income and a rise in operating expenses dealt a blow.
Ten of the 11 SET-listed banks have submitted their unreviewed consolidated net profit for the first quarter. Krungthai Bank is due to release its quarterly net profit on Monday.
Siam Commercial Bank's net profit slid 19.4% from a year earlier to 9.2 billion baht for the three months to March, eroded by lower non-interest income and higher operating expenses related to severance payments to comply with the amended labour law, according to an SCB statement.
A 37.2% year-on-year decline in net fee and service income to 1.72 billion baht was attributed to a sharp fall in non-interest income. Operating expenses at the country's largest lender by assets rose by 10% year-on-year to 17.8 billion baht, due to a one-time increase in personnel-related expenses of 1.4 billion, resulting in a rise in cost-to-income ratio to 51.6% from 47.7% a year earlier and 45.9% in the preceding quarter.
Non-interest income tumbled by 18.2% from a year ago to 9.86 billion baht during the first quarter. On the back of 3% year-on-year loan growth, net interest income grew 6% to 24.7 billion baht.
"In light of the additional provisions provided in the last quarter, the bank set aside 5.4 billion baht of provisions or 102 basis points in credit cost to ensure an adequate buffer against the current growth momentum," SCB said.
Gross non-performing loan ratio fell to 2.77% at the end of March from 2.85% at the end of 2018. NPL coverage ratio strengthened to 152.8% from 146.7% in the previous quarter.
Kasikornbank (KBank), the second-largest bank by assets, saw a 6.7% year-on-year decline in its unreviewed consolidated net profit to 10 billion baht for the three months through March, mainly dragged by non-interest income.
Despite a 6.57% rise in net interest income and 3.05% lower impairment costs for loan loss, KBank failed to completely offset the 19% fall in non-interest income, it said in a filing with the Stock Exchange of Thailand.
According to a breakdown of non-interest income, net fees and service income plunged 17.3% from a year earlier to 1.83 billion baht as a result of transaction fee waivers for digital channels and the decline in fees from fund management.
Moreover, KBank's net premiums during the first quarter slumped 96.8% on the same period last year to 36 million baht, due to lower insurance premiums.
Net interest margin (NIM) inched lower to 3.32% for the first quarter from 3.37% a year earlier, while cost-to-income rose to 42.7% from 41.2% in the corresponding period the year before.
The bank's gross NPLs climbed to 3.44% of loans outstanding at the end of March from 3.34% at the end of last year. NPL coverage ratio fell to 158.78% at the end of March from 160.60% at the end of 2018.
Bank of Ayudhya (BAY) was the best performer among industry peers, with a 104.9% year-on-year increase in first-quarter net profit to 12.7 billion.
The stunning financial performance was due to divestment of a 50% stake in auto title lending arm Ngern Tid Lor Co Ltd in February, BAY said.
The bank's non-interest income jumped nearly 240% year-on-year to 12.1 billion baht, while net interest income rose 7.7% to 19.4 billion.
A 5% year-on-year decline in loan-loss provision to 6.35 billion baht also gave a boost to the bottom line. Gross bad loans fell to 1.99% of loans outstanding at the end of March from 2.08% at the end of 2018.
BAY's NIM improved to 3.79% for the January-to-March quarter from 3.67% in the same period last year.
TMB Bank was the worst performer, seeing its first-quarter net profit dip 30.8% from a year earlier to 1.58 billion baht.
A 37.2% year-on-year decline in net fee and service income to 1.72 billion baht was attributed to the sharp fall in non-interest income. Operating expenses surged by 11.1% from a year earlier to 4.74 billion baht during the first quarter this year.