Third-quarter net profits recorded by commercial banks' are expected to show a drop from the corresponding period last year, because of higher corporate income tax payments, the qualitative approach to classifying non-performing loans and setting aside reserves to cover losses from assets transferred to Thai Asset Management Corp (TAMC).

Capital Nomura Securities estimates that the combined quarterly net profit of all commercial banks, excluding UOB Bank (Thai), Standard Chartered Bank (Thai), Land and Houses Retail Bank and GE Money Retail Bank, will slump 19 per cent on year but rise 6 per cent on quarter, to Bt20.62 billion.

Bank of Ayudhya is expected to be the best performer among its industry peers with a 17-per-cent profit rise over the same period last year, to Bt1.89 billion, the broker said.

Bank of Ayudhya's third-quarter net profit is also predicted to rise 12 per cent above that of the previous quarter, thanks to the receipt of more than Bt500 million from its recent disposal of Prasit Patana Plc.

Capital Nomura puts state-owned Krung Thai Bank in the same camp as the Bank of Ayudhya, with its quarterly net profit expected to grow 1 per cent on year to Bt4.68 billion.

However, it believes all the other commercial banks will show a decline in third-quarter net profits over their performances in last year's third quarter.

TMB Bank is expected to be the worst performer in the period, with a 54-per-cent year-on-year slump to Bt949 million. It is also expected to be the worst quarter-on-quarter performer, with a 21-per-cent tumble from its second-quarter figures. The allocation of higher loan-loss reserves is seen as the main cause of the grim performance.

The broker believes Siam City Bank will show the best quarter-on-quarter growth in net profit, with a 58-per-cent surge on the back of a dividend from the Vayupak Fund and a net interest margin that rose from 2.51 per cent in the second quarter to 2.89 per cent.

Bangkok Bank's net profit for the third quarter will slip by 24 per cent on year and 16 per cent on quarter to Bt3.68 billion, it said.

Kasikornbank's net profit is expected to fall 16 per cent, both on year and on quarter, to Bt2.99 billion.

Siam Commercial Bank's third-quarter net profit will slump 30 per cent year on year and 11 per cent on quarter to Bt3.69 billion, Capital Nomura Securities said.

Ayudhya Securities has forecast that local banks' quarterly net profits will drop 23 per cent year on year and 6 per cent on quarter to Bt17.82 billion.

However, its estimates cover only six banks: Bangkok Bank, Krung Thai Bank, Siam Commercial Bank, Kasikornbank, TMB Bank and Siam City Bank.

The broker's estimate is based on the assumption of reserves for loan-loss provision being 34 per cent higher on year and 7 per cent higher on quarter. Setting aside reserves to cover losses from assets transferred to TAMC is another factor in the expected decline in third-quarter net profit, it said.

Ayudhya Securities forecasts that Siam City Bank's third-quarter net profit will be 52 per cent higher than its second-quarter performance, at Bt1.13 billion. This will follow solid loan growth and a Bt189-million dividend from the Vayupak Fund.

It estimates that Krung Thai Bank's third-quarter net profit will surge 24 per cent over the previous quarter to Bt4.67 billion. This is based on a Bt1-billion dividend from the Vayupak Fund and a 48-per-cent quarter-on-quarter decline in loan-loss reserve provision.

The quarterly net profits of Bangkok Bank and Siam Commercial Bank are expected to fall, on quarter, by 24 per cent and 17 per cent, respectively. This is because of loan-loss provisions amounting to Bt1 billion and Bt700 million, respectively, incurred from transferring assets to TAMC during the quarter.

The broker believes that in the third quarter, banks' net interest margins - in broad terms, the difference between deposit and lending rates - fell 7 basis points on quarter to 3.3 per cent, due to the launch of special deposit accounts.

Siam Commercial Bank president and CEO Jada Wattanasiritham said her bank's spread between deposit interest rates and lending interest rates fell in the third quarter to about 3 per cent, compared with around 3.4-3.6 per cent in the second quarter. The fall was due to a higher rise in deposit rates than in lending rates.

The bank's lending will show growth of 7 per cent in the first nine months of this year, driven mainly by corporate lending and borrowing by small- and medium-sized enterprises. Its growth target for the full year is 10 per cent.

Kasikornbank president Prasarn Trairatvorakul said his bank's loan growth this year would be about 6 per cent, which would meet its target of 6-9 per cent.

Tisco Bank emerged as the first bank to announce its third-quarter earnings. Its quarterly net profit amounted to Bt332.39 million, well below last year's figure of Bt507.63 million in the same period.

Somruedi Banchongduang

The Nation