"We are in discussions with our major shareholders on the capital issue. The Finance Ministry and DBS Bank have informed the bank that they will support us to strengthen the bank's capital base," CEO Subhak Siwaraksa said yesterday.

TMB Bank's four major shareholders are the Finance Ministry, DBS Bank of Singapore, the Royal Thai Army and Thai Life Insurance Group. They hold 31.1 per cent, 16.1 per cent, 5 per cent and 1-2 per cent of the bank respectively.

Last year the country's fifth largest bank raised registered capital by Bt9.7 billion and also issued hybrid bonds worth US$200 million (Bt7.6 billion).

Subhak said the bank aimed to increase its capital-adequacy ratio to 12 per cent from 10.4 per cent at the beginning of this year, even though it was already higher than the Bank of Thailand's minimum requirement of 8.5 per cent. He declined to estimate the amount of capital injection because it depended on several factors including the bank's operating profit, non-performing loans (NPLs) and loan expansion.

If the Finance Ministry cannot fully subscribe to its portion of the bank's capital-increase shares, Subhak personally thinks DBS Bank would be interested in it.

Last year, when DBS Bank sold off its 40-per-cent stake in Capital OK Co Ltd, a consumer-finance firm owned by Shin Corp Plc, the move was reportedly due to DBS Bank wanting to focus on TMB Bank, which is now the foreign bank's sole investment in Thailand.

"The bank will formally propose the capital-increase plan as a package that includes wiping out retained losses by reducing par value. However, the bank can't indicate the exact timing of the plan's implementation as it depends on the Finance Ministry's final decision and the market environment," Subhak said.

The package would revolve around the bank's business plan, particularly a more aggressive NPL-resolution programme, as well as its funding-mobilisation plan. The bank's shares have a par value of Bt10 each, while its retained losses have reached Bt53 billion.

TMB Bank recently discussed how to clean up its retained losses by reducing par value with the former finance minister, Thanong Bidaya, but the proposal was rejected.

Subhak said TMB Bank targeted cutting NPLs to 6 per cent by the end of this year from 10.3 per cent today by selling off bad loans of Bt20 billion this quarter.

TMB Bank turned to a net loss of Bt12 billion last year from a net profit of Bt7.9 billion in 2005. The bank's earnings decreased sharply because of Bt18 billion in total provisions, of which Bt13 billion was for compliance with International Accounting Standard (IAS) 39.

Meanwhile, Bangkok Bank yesterday reported a pre-tax and pre-provisioning profit of Bt32.7 billion for last year, an increase of 21.8 per cent from 2005.

However, with higher corporate income tax and higher provisioning expenses, its net profit for the year was Bt17.9 billion, down from Bt20.3 billion in the previous year.

The bank's non-performing loans declined from Bt100.6 billion at the end of 2005 to Bt89.1 billion at the end of last year, equivalent to 9.2 per cent of total loans.

Siam Commercial Bank late on Thursday reported a consolidated net profit for last year of Bt13.29 billion, down 29.6 per cent from Bt18.88 billion, due mainly to a one-time provision for IAS39 of Bt5.1 billion as well as higher corporate-income-tax expense.

In the fourth quarter alone, the bank's net profit was Bt1.2 billion, down Bt3.2 billion year on year due mainly to higher provisioning.

State-owned Krung Thai Bank reported an 8.1-per-cent increase in 2006 net profit, as both interest and non-interest income jumped from the year earlier.

The bank's net profit rose to Bt14.08 billion from Bt13.02 billion in 2005, the bank said in a filing to the Stock Exchange of Thailand.

Somruedi Bangchongduang

The Nation