Three banks report higher net profits, lower NPL rates in 2012

Kasikornbank, Krungsri Group and CIMB Thai Bank yesterday reported not only robust net-profit growth last year but also lower rates of bad loans.

KBank's fourth-quarter net profit fell by 16.5 per cent from the third quarter because of high expenses, but its net for the full year marked a record high of Bt35.26 billion. The profit slump in the last quarter resulted from the peak cost-to-income ratio of 50.5 per cent and loan-loss provision.

An analyst at Asia Plus Securities is upbeat on KBank's performance this year as it emphasises balanced growth and asset quality.

The bank targets loan growth of 9-11 per cent by focusing more on high-yield lending to small and medium-sized enterprises and the retail segment. Last year, KBank recorded loan growth of 9.6 per cent to outstanding loans of Bt1.33 trillion.

Somkiat Sirichatchai, senior executive vice president of KBank, said in a statement that operating profit before income tax totalled Bt48.98 billion, up 22.01 per cent over the previous year thanks to a 12.55-per-cent increase in net interest income. Net interest margin (NIM) stood at 3.58 per cent. Meanwhile, non-interest income rose by 19.72 per cent.

As of December 31, KBank and its subsidiaries' total assets were Bt2.07 trillion, up by 20.58 per cent from the previous year, mostly on increases in interbank and money-market items-net, investments-net and loans. The gross rate of non-performing loans (NPLs) improved to 2.16 per cent from 2.45 per cent.

Krungsri Group (Bank of Ayudhya and its subsidiaries) targets higher loan growth this year as its aims to sustain the momentum of 2012, which showed robust loan growth of 17.2 per cent.

Janice Van Ekeren, the group's chief executive officer, said the outlook for loan growth would continue to be strong, supported by an accommodative monetary policy, government investment projects, and consumer spending. Investments from renewed capital-expenditure cycles and healthy consumer spending will be the key drivers of growth.

Krungsri announced consolidated net profit of Bt14.7 billion in 2012, an increase of 57.7 per cent from 2011. Key drivers were higher net interest income resulting from strong loan growth and healthy fees and service income growth.

NIM was maintained at 4.33 per cent despite the rate increase by the Financial Institutions Development Fund and the impact of flooding forbearance measures for customers in the first quarter of 2012.

Performing loans grew 17.2 per cent, or Bt118.7 billion, compared with December 2011. The group's retail segment was the key contributor, with outstanding loans growing by 24.2 per cent in 2012. The SME and corporate segments also grew strongly at 12.6 per cent and 3.7 per cent respectively.

NPLs declined to Bt21.3 billion from Bt29.5 billion in December 2011. The group's NPL ratio now is 2.4 per cent, the lowest since 1993.

CIMB Thai Bank posted 2012 net profit of Bt1.58 billion, up by 20.1 per cent, mainly from growth in net fee income of 48.4 per cent and net interest income of 12.4 per cent, while the NPL rate decreased to 2.8 per cent.

Subhak Siwaraksa, president and chief executive officer of CIMB Thai Bank, stated that net fee and service income increased by 48.4 per cent, mainly on the increase in corporate finance and advisory fees. Meanwhile, NIM dropped to 3.21 per cent from 3.46 per cent in 2011 mainly because of the additional deposit-insurance fee that was introduced in May 2012.

Additionally, NIM was eroded by higher deposit and borrowing (bill of exchange) costs resulting from intense competition in the deposit market.

As at the end of 2012, total gross loans stood at Bt138.8 billion, marking an increase of 16.4 per cent from the same period in 2011. Loan growth was largely a factor of expansion if the retail portfolio. Meanwhile, deposits and bills of exchange increased by 8.8 per cent to Bt146.2 billion.

The NPL rate improved to 2.8 per cent at the end of 2012 from 3.4 per cent a year earlier. The reduction was mainly due to the sale of NPLs in the fourth quarter.