KTB, CIMB Bank report higher Q3 profits; NPLs rise

KTB reported consolidated net profit of Bt9.25 billion in the quarter, up by 3.23 per cent from Bt8.96 billion in the same quarter a year earlier. The increase was due mainly to higher net interest income from strong loan growth in the government and retail sectors.

In the first nine months, KTB’s consolidated net profit was Bt25.17 billion against Bt24.09 billion over the same period last year.

Lending in the first nine months grew by 5.25 per cent to outstanding loans of Bt1.8 trillion.

However, NPLs as of the end of September had surged to 3.08 per cent from 2.65 per cent at the end of last year, mostly as loans to small businesses and retail customers affected by the economic slowdown went bad.

Net interest margin (NIM) increased to 2.77 per cent in the third quarter from 2.76 per cent a year earlier, but non-interest income decreased 4.51 per cent year on year.

CIMB Thai Bank reported third-quarter net profit of Bt274.94 million, down from Bt416.88 million in the same quarter last year. As a result, for the first nine months, the bank recorded consolidated net profit of Bt900 million, a decrease by 6.3 per cent year on year.

In the first nine months, CIMBT’s loans rose by 6.9 per cent, behind its projection of 15 per cent, and NPLs climbed to 3.3 per cent from 2.5 per cent at the end of last year, from retail and instalment-loan business.

The underperformance in the first nine months was due mainly to higher operating expenses, which expanded by 16.8 per cent, and a 67.4-per-cent year-on-year increase in loan loss provisions, following the economic uncertainties that hit the Kingdom since the end of last year.

The bank has total provisions of Bt5.6 billion.

CIMBT chief financial officer Narongchai Wongthanavimok said the direction of the economy would continue to be uncertain into next year, so loan growth this year would be lower than the target of 15 per cent.

Next year, the bank will shift focus from loan growth to fee income to avoid the impacts from economic uncertainty.

“The economic slowdown has hit the confidence of enterprises, which are undecided on whether to withdraw credit lines, and some SME customers were refinanced, causing lending in the first nine months to grow by only 6.9 per cent,” he said.

The bank will focus more on fee-based income, especially in the SME sector. The proportion of fee-based income from small and medium-sized enterprises is much lower than from large corporate customers. The proportion of fee-based versus interest income should be 40 per cent in the next two or three years, up from 20 per cent currently.

CIMBT is conducting a feasibility study on selling bad debts to improve its NPL rate, which mostly are in the retail sector.