Banks' Q2 profits hit by tax, higher interest charges
Second-quarter results for Thai banks declined as the market had expected, due mainly to tax burdens and increasing interest expenses after recent rate hikes.
Siam City Bank (SCIB) posted a net profit of Bt734.29 million for the second quarter, a 53.82-per-cent decrease from Bt1.59 billion in the same period last year. The result was due to key factors like the tax burden rising to almost Bt245 million in the second quarter from Bt174.23 million in the first, salary increases for bank staff and a decrease in investment gains. Meanwhile, its interest expenses rose to Bt3.2 billion in the second quarter compared with Bt1.54 billion in the first. The bank, however, showed improved interest income of Bt5.9 billion in the second quarter, up from Bt4.21 billion in the first. For first-half results, SCIB posted a net profit of Bt2 billion, also down year on year from Bt3.26 billion previously. SCIB president Arun Chirachavala said second-quarter revenues from the core banking business were better than what the bank had projected. In particular, first-half interest income showed growth of 5 per cent year on year, despite lower lending. "The bank is adjusting its loan-growth target after new loans provided only Bt10 billion from the full-year target of Bt40 billion. Although our lending will be lower than that target, we will maintain interest income for this year," said Arun. He said lower returns from long-term investment in government and state-owned-enterprise bonds also greatly affected the bank's first-half net profit. Interest rates sharply increased over the period and this factor will affect the bank's results until the middle of next year. In addition, Arun said the banking industry had shown lower net profits in the second quarter than in the first. Uncertainty in the country's economic and political situations is particularly affecting bank lending. Siam Commercial Bank yesterday said its net profit for the second quarter came in at Bt4.17 billion, bringing its first-half net profit to Bt8.39 billion. Previously, Kasikornbank announced a net profit for the second quarter of Bt3.54 billion, down 7.89 per cent year on year. The bank's interest expense rose almost 138 per cent year on year, from Bt1.7 billion in the first quarter to Bt4.04 billion in the second. Tisco Bank recorded a second-quarter net profit of Bt351 million, compared with Bt400 million in the first. This was due mainly to a 13-per-cent drop in net interest and dividend income, because of higher interest-rate expenses following sharp rate hikes.
Somruedi Banchongduang The Nation
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