Some commercial banks report declines in Q1 net profit as uncertainty bites

Economy April 18, 2014 00:00

By The Nation

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The prolonged political deadlock has dampened some commercial banks' first-quarter net profits compared with the same period last year.



TMB Bank yesterday reported net profit for the first quarter of Bt1.602 billion, a drop of 12 per cent year on year. Its net interest margin (NIM) fell by 8 basis points to 2.87 per cent.

The decline in NIM reflected loan growth of only 0.3 per cent from the end of last year, but the bank saw strong deposit growth of 5.5 per cent.

Amid the political uncertainty and weakening economic factors, TMB has adjusted its loan-growth target for the year to 6-8 per cent from the previous target of 10 per cent.

Non-interest income also declined 10.2 per cent year on year, as credit-related fees fell due to lower new-loan growth and sluggish mutual-fund sales amid the unfavourable market conditions.

Tisco Financial Group’s net profit for the first quarter plunged 19 per cent year on year to Bt934.7 million, due mainly to a decline in non-interest income and a drop in lending.

Non-interest income at Tisco Group decreased by 17.2 per cent year on year due to a decline in banking fees in the wake of a contraction of loan and bancassurance business led by the slowdown in the domestic economy. Furthermore, brokerage fees decreased by 54.2 per cent year on year due to a significant decrease in average market trading volume.

In the first quarter, Tisco witnessed a loan drop of 2.6 per cent from the end of last year due to the sluggish domestic economy and the political uncertainty. As a result, NIM decreased slightly from 2.8 per cent to 2.7 per cent year on year.

Siam Commercial Bank, the country’s third largest bank by assets, also witnessed flat growth in its first-quarter net profit, which stood at Bt13.13 billion.

Lending in the first quarter saw flat growth from the end of last year.

Non-interest income in the first quarter decreased 6.5 per cent, the result of lower dividend income due mainly to an exceptionally large dividend from an investment in the bank’s equity portfolio booked in the first quarter of 2013. This reduction was partially offset by the healthy growth of net fees and insurance premiums of 9.1 per cent year-on-year, mainly from premium income and corporate finance fees.

The bank set aside Bt3.2 billion in loan-loss provisions in the first quarter, 27 per cent more than in the first quarter of last year. The ratio of non-performing loans to overall loans stood at 2.11 per cent at the end of March, up from 2.06 per cent in the same period last year.