By THE NATION
Net interest income increased by Bt2.830 billion or 11.21%, mainly due to loan growth and the TFRS 9 revenue recognition concept whereby income from interest income and loan-related fees are calculated by using effective interest, instead the contractual rate as previously.
Non-interest income decreased by Bt4.869 billion or 39.78% mainly due to volatility in the money and capital markets during the coronavirus-triggered recession, and TFRS 9 impacts from reclassification of investments that reflect in non-interest income.
However, other operating expenses increased by Bt1.471 billion or 9.19% due to costs related to debt management, IT and marketing, resulting in a cost-to-income ratio of 49.31%.
KBank president Patchara Samalapa noted that Thai economic activity in the first quarter of 2020 saw a contraction almost across the board due to the Covid-19 pandemic.
Tourism and exports shrank amid signs of a global economic recession as lockdown measures implemented in several countries crippled travel and international transport. Domestically, the viral transmission dampened spending sentiment and sent financial markets into a tailspin.
In response, the Bank of Thailand cut its policy rate and implemented additional measures in order to stabilise the financial system, while the government issued stimulus packages to ease the impact of the virus crisis.
On January 1 this year, KBank and its subsidiaries adopted Thai Financial Reporting Standards (TFRS), which affect the classification and measurement of financial assets and financial liabilities, impairment of financial assets and hedge accounting. The impact of first-time adoption is included in retained earnings as of January 1.