Banks’ net profit slides 4.9% in 1st half

However, funding-cost management resulted in strong net interest margins (NIMs) compared with the first six months of last year, said Usanee Liurut, senior analyst at Asia Plus Securities.
Siam Commercial Bank reported the highest net among its peers of Bt23.36 billion, but that was down by 11.4 per cent from Bt26.4 billion a year earlier. Even though the third-largest bank by assets reported less net profit, it was able to maintain NIM at 3.24 per cent thanks to lower cost of deposits after implementing a strategy to increase the proportion of savings and current accounts.
SCB’s funding cost as of June 30 was 1.52 per cent against 1.58 per cent as of March 31.
In the first half of 2016, its NIM increased by 5 per cent year on year to Bt43.43 billion, while interest income from loans decreased by 2.4 per cent, mainly from reduced interest rates.
SCB reported loan growth in the first half of the year of 1.3 per cent, driven by housing loans.
Kasikornbank’s net profit slumped by 20.14 per cent to Bt19.07 billion in the first half, mostly because it set aside higher allowances for impairment loss on loans to reserve for uncertainties from the economic slowdown. However, its net interest income increased by 5.29 per cent and NIM stood at 3.57 per cent.
Other operating expenses decreased by 2.95 per cent, resulting in a cost-to-income ratio of 39.32 per cent.
Bangkok Bank’s net profit in the first half dropped by 11.23 per cent to Bt15.48 billion because of an increase of Bt3.5 billion or 15.9 per cent in operating expenses due mainly to provisions for contingencies, and a decrease of 10 per cent in non-interest income.
Net interest income, however, rose by 15.2 per cent from the gradual maturing of high-rate fixed deposits, causing its NIM to improve to 2.33 per cent year on year from 2.08 per cent.
Krungthai Bank reported net |profit of Bt16.21 billion, down by 0.97 per cent. KTB also reported strong growth in net interest income due to funding-cost management. NIM rose to 3.28 per cent from 3.11 per cent in the first half of last year.
However, its non-performing loans continued to increase |from the end of last year, largely from business clients. Its NPL rate as of June 30 was 3.89 per cent.
Usanee of Asia Plus said that even though lending by the banking industry had contracted, the banks’ performance in the first half of 2016 was impressive because of their funding-cost management, resulting in healthy NIM.
She said funding-cost management was key to the profitability of the sector and the profits of small banks continue to grow with healthy NIM. Meanwhile NIM of large banks in the third quarter might decrease from the recent lending-rate cuts to help their business customers.
Among the top five banks, Bank of Ayudhya reported net profit for the first half of Bt10.4 billion, a robust 20.1-per-cent increase from the first six months of 2015, driven largely by higher net interest income.
Net interest income reached Bt30.248 billion, an increase of 9.4 per cent year on year from higher hire-purchase and financial-lease income.
Meanwhile, interest expenses dropped by Bt1.813 billion on a decrease in interest on deposits together with lower cost of borrowings, mainly from maturity of debentures during the period.
NIM in the first half was 3.78 per cent, down from 4.23 per cent.