Higher provisions dampen banks' earning growth in Q2

Nine listed banks reported second-quarter earnings totalling Bt40.03 billion, up by 14.50 per cent from Bt34.96 billion a year earlier. Total net profits in the first half increased by 19.26 per cent to Bt81.04 billion from the same period last year. 

Profitability driven by non-interest income rather than net interest income and overall net interest margins (NIM) showed improvement despite the intense competition for deposits.

Siam Commercial Bank (SCB) posted the highest profit among its peers at Bt12.6 billion, up by 28.5 per cent year on year. The high profitability was driven by net interest income (up 18.1 per cent) and non-interest income (up 20 per cent). Its non-performing loans (NPL) stood at 2.1 per cent. Net profit for the first half of 2013 was Bt25.8 billion, an increase of 29.7 per cent year on year.

SCB sets a prudential measure against future economic uncertainties by increasing reserves to Bt2.7 billion from Bt2.55 billion, making the NPL coverage ratio 144.9 per cent.  

Kasikornbank announced net profit for the second quarter of Bt10.98 billion, up from Bt9.36 billion a year earlier. Net profit for the first half was Bt21.08 billion, a rise of 14.87 per cent over the same period of 2012.

In this period, KBank set aside provisions of Bt2.02 billion for impairment loss on loans as a counter-cyclical provision to prepare the bank for any future economic downturn and changing economic circumstances, both domestic and abroad. The bank in the first quarter set provisions of Bt3.46 billion. Provision for the first half rose to Bt5.48 billion, increased from Bt3.65 billion in the same period last year. The coverage ratio stood at 133.93 per cent. 

Also as a counter-cyclical buffer, TMB set the highest extra provision in the sector at Bt4.14 billion, making the total provision for the first half Bt4.67 billion. The coverage ratio at TMB increased to 139 per cent, against 100 per cent required by the Bank of Thailand.

TMB’s consolidated net profit after provisions was Bt251.54 million, down from Bt976.73 million a year earlier. Even so, net profit in the first half of 2013 was Bt2.07 billion, an increase of 16 per cent compared with the same period last year.

 

TMB

NIM at TMB expanded to 2.97 per cent from 2.59 per cent.

Bangkok Bank set aside provisions of Bt3.38 billion in the second quarter, taking the loan loss reserve coverage for NPLs to 206.1 per cent, the highest in the banking industry. Profitability at BBL in the second quarter was driven mainly by fee-based income from mutual funds and bancassurance. NIM at BBL in the first half of 2013 dropped to 2.41 per cent from 2.49 per cent in the second half of 2012.  

Chartsiri Sophonpanich, president of the bank, said BBL maintained its focus on prudent management and consistent provisioning for reserves. Provisions on loans and debt securities for the first half of 2013 were Bt5.12 billion. 

Krungsri Group (Bank of Ayudhya and its business units) set extra reserves of Bt2.6 billion for the second quarter, and this one-time impact caused net profit in the second quarter to drop by 17 per cent to Bt3.04 billion year on year. For the first half of 2013, Krungsri Group recorded net profit of Bt7.1 billion, a decline by 0.4 per cent from Bt7.13 billion year on year. 

The counter-cyclical reserves caused its excess reserves to increase to Bt15.7 billion from Bt12.3 billion, higher than the BOT requirements. The coverage ratio improved to 152 per cent from 146 per cent in December 2012. 

Janice Van Ekeren, chief executive officer of Krungsri Group, said the bank undertook the prudent step of posting an additional provision of Bt2.6 billion as a counter-cyclical resource in the event of a slowdown in economic or business activities, either domestically or internationally. 

As of June 30, loans grew at 4.1 per cent. Krungsri maintains its projected loan growth at 12 per cent for the whole year. NIM in the second quarter improved to 4.31 per cent from 4.28 per cent in the first quarter and NPL ratio was maintained at 2.4 per cent. 

Kiatnakin Bank reported consolidated net profit of Bt1.23 billion from Bt817.68 million year on year thanks to the capital-market business operated by Phatra Capital. The bank set aside more specific provisions amounting to Bt829 million after rising NPLs from used-car loans, leading to a coverage ratio of 110.7 per cent compared with 109.5 per cent at the end of 2012. 

NPLs in the second quarter climbed to 3.5 per cent from 3.3 per cent at the end of last year.