TBank, TMB report good Q3 results, as SCB plunges 32% amid SSI saga
SIAM COMMERCIAL BANK'S net profit in the quarter plunged by 32 per cent to Bt9.02 billion from the same period last year because of the substantially higher additional provisions required for two large corporate clients, Sahaviriya Steel Industries (SSI)
Their loans were classified as non-performing in the third quarter of 2015.
This is the first time in the past three years that SCB’s quarterly net profit was below Bt10 billion.
SCB set aside substantial additional provisions of Bt11 billion to cover both SSI and SSI-UK, over and above the normal loan provision of Bt5 billion previously guided for the third quarter. As a result, total provisions rose to Bt16 billion, compared with Bt3.2 billion in the third quarter of 2014, an increase of almost 400 per cent.
As a result of the SSI loans being classed as non-performing, SCB’s NPL ratio rose to 3.02 per cent as of the end of the third quarter, up from 2.22 per cent at the end of the previous quarter. As loans to SSI-UK had been fully provided assuming no collateral value, the bank wrote off this loan at the end of September. Concurrently, the coverage level for NPLs, excluding collateral, decreased from 134.8 per cent at the end of the second quarter to 100.8 per cent at the end of the third.
Arthid Nanthawithaya, deputy chairman of the executive committee and chief executive of the bank, noted that “the sharp decrease in net profits was disappointing but we believe that it is prudent for us to provide for the changed economic circumstances of SSI on a very conservative basis and then move on.
“The unprecedented scale and depth of the sharp global downturn in the steel industry would have been difficult to anticipate at the time SSI acquired its UK-based steel plant.
“Looking ahead, the board of directors firmly believes that the current new initiatives that are under way to transform our bank’s franchise will reinvigorate our future profitability and demonstrate the sustainability of our economic returns,” he said.
Earlier, the bank revised upwards its loan-loss-provisioning guidance for the second half of 2015 at 100-110 basis points of total loans outstanding, mainly on the expectation that a slowing Thai economy amid global economic volatility was likely to lead to more new NPLs. However, in the quarter following the abrupt closure of SSI-UK’s steel plant and the consequent appointment of an official receiver, not only did this large subsidiary of SSI turn NPL but, in addition, the value of its collateral was marked down to zero.
Meanwhile, net earnings of the sixth- and seventh-largest banks, Thanachart Bank and TMB Bank, in the third quarter showed impressive growth compared with the same period last year as they set aside less provisioning.
As for Thanachart Bank, it reported net earnings in the third quarter of Bt2.71 billion, up 11.74 per cent from the same quarter last year. Easing NPLs and provisions for auto lending, TBank, the biggest lender to car buyers, set provisions of Bt1.5 billion in the third quarter, down from Bt1.6 billion to Bt1.7 billion in the first two quarters, said chief financial officer Anuwat Luengtawekul.
Its NPL rate improved to 3.42 per cent from 3.65 per cent in the previous quarter, so its coverage ratio increased to 111.58 per cent from 100.12 per cent in the second quarter.
TMB Bank reported net earnings for the third quarter of Bt2.81 billion against Bt2.38 billion in the same period last year from the reduction of loan-loss provisions.
During the quarter, TMB sold NPLs worth Bt858 million, on which Bt285 million of excess provisioning was reversed. solidated and bank-only basis.
Boontuck Wingcharoen, chief executive officer of TMB, said that despite the challenging economic environment, TMB’s nine-month performance improved from the same period last year.
