THE counter-cyclical loan-loss provisioning in the third quarter by major banks dampened their overall net earnings in the first nine months of this year.
Even the economic outlook in the third quarter improved from the previous quarters due to an expansion in the export sector, private consumption and the tourism sector, the profitability of the banks was challenged from the huge amount loan-loss provisions.
The 11 listed banks saw their net profit for the first nine months come in at Bt150.22 billion, down 3.34 per cent from the Bt155.41 billion recorded for the same period of last year.
For the nine months, Siam Commercial Bank (SCB) delivered the highest net profit in the sector at Bt33.95 billion. But this represented a drop of 2.7 per cent from the Bt34.89 billion booked a year earlier.
The profit decline was due to the bank’s setting aside a large loan-loss provision. For the quarter, SCB set aside a loan-loss provision of Bt7.55 billion, higher than the Bt5.01 billion in the second quarter year and the Bt7.01 billion in the third quarter of last year.
Apart from the large loan-loss provision, the expenses from the bank’s organisational and technology transformation roadmap towards digital banking affected its bottom line as well.
Among the other major banks, Krungthai Bank was an underperformer, with a plunge in net profit in the first nine months and the third quarter compared with the same periods of last year, due to a massive loan-loss provision.
KTB’s net profit for the nine months was Bt17.63 billion, down by 29.08 per cent year on year. It has increased its provision expenses by Bt7.25 billion, 30.23 per cent more than for the same period of 2016.
Kasikornbank posted net profit for the nine months of Bt28.63 billion, a fall of 4.34 per cent year on year, mostly because KBank has set aside a higher allowance.
Bangkok Bank (BBL) was the only major bank that maintain its rate of net profit growth even though it had set aside a larger loan-loss provision than for the same period last year. In the first nine months, BBL made a provision of Bt17.75 billion, against Bt12.13 billion for the same period a year earlier.
BBL did well in non-interest income for the nine months with Bt11.7 billion, an increase of 7 per cent year on year.
Among the peers, CIMB Thai Bank showed the weakest profit performance due to the ongoing loan-loss provisions. Its net profit dropped 30.57 per cent year on year to Bt554 million.
Tisco Financial Group was the strongest performer, with net profit by growing 22.91 per cent to Bt4.56 billion, thanks to lower provision expenses and healthy net interest income and non- interest income.
Kiatnakin Bank’s consolidated net profit for the third quarter totalled Bt 1.723 billion, an increase of 45.4 per cent on a quarterly basis and 1.9 per cent on the yearly basis. The consolidated net profit for the first nine months of 2017 was Bt4.432 billion, a gain of 8.2 per cent from the same period last year.