Banks see NIM growth in Q3 despite deposit rush

Despite their competition to offer the most attractive deposit interest rates, banks still saw growth in their net interest margin (NIM) in the third quarter, thanks to their heavier focus on providing loans to high-yield segments of both retail customers and small and medium-sized enterprises.
The 11 listed banks’ net profit in the third quarter was a combined Bt45.19 billion, against Bt38.18 billion in the same period last year.
All of them enjoyed growth in net profit except Bangkok Bank and Thanachart Capital, while state-owned Krungthai Bank (KTB) showed the highest net-profit growth among larger banks.
An analyst at Phillip Securities said the financial results showed that the banks were able to manage the cost of funding very well. Moreover, the product mix between SME and retail loans helped sustain NIM for many of them.
Some, including Bangkok Bank, are planning to focus more on high-yield loans in a bid for a wider margin. It reported that its NIM dropped to 2.55 per cent from 2.66 per cent year on year because of its campaigns to lure deposits.
Deposits expanded by 11.9 per cent while loan growth was 5.4 per cent from the end of last year.
The country’s largest bank by assets reported net profit of Bt7.53 billion, down by 2.26 per cent from Bt7.55 billion in the same quarter last year, mainly on high operating expenses.

TWO GOOD QUARTERS
KTB, the second-largest bank, reported a second consecutive quarter of net-profit growth. It posted net earnings of Bt8.91 billion, up by 62 per cent from the same quarter last year. In the previous quarter, KTB saw net-profit growth of Bt7.22 billion, an increase of 37.23 per cent, the highest growth rate among larger banks.
KTB’s strategy to focus on high-yield products and reduce the proportion of lending to the state sector has benefited its bottom line, as its NIM increased to 2.8 per cent from 2.5 per cent in the second quarter. The rate of non-performing loans (NPLs) improved to 3.42 per cent from 3.54 per cent as of the end of June.
Siam Commercial Bank’s net profit remained above Bt10 billion for a third consecutive quarter. However, SCB’s net earnings in the quarter declined slightly to Bt10.02 billion from Bt10.07 billion in the second quarter and Bt10.34 billion in the first quarter.
Increasing its focus on SME and retail loans helped broaden NIM in the third quarter to 3.27 per cent from 3.25 per cent in the second, and the NPL rate reduced to 2.1 per cent from 2.3 per cent.
Kasikornbank’s net profit in the third quarter was Bt9.21 billion, up by 19 per cent year on year from Bt7.76 billion.
The strong growth of fee income and the cost of fund management were key drivers of the bottom line as well as NIM. KBank’s NIM in the third quarter rose to 3.51 per cent from 3.42 per cent quarter on quarter. NPLs reduced to 2.07 per cent from 2.2 per cent as of the end of June.
TMB Bank showed surprising net-profit growth in the third quarter, reporting Bt1.44 billion, a surge of nearly 92 per cent, driven by loan expansion, growth of fee income and a broader net interest margin. NIM improved to 2.86 per cent from 2.5 per cent quarter on quarter thanks to the growth in loans to SMEs.

DISAPPOINTED
Thanachart Capital, which showed surprising earnings growth in the second quarter, showed disappointing financial figures in the third. TCAP is the only financial house to witness a drop in net-profit growth.
Its net profit fell by 7 per cent to Bt1.24 billion because of a higher loss provision and the dip of NIM from the higher cost of funding.
Bank of Ayudhya’s NIM was unchanged from the previous quarter