Krungsri posts jump in profits quarter on quarter but wary of Covid-19 impact

The company attributed the higher net profit to the higher operating profit, partially offset by an increase in the expected credit losses, based on an outlook of exacerbated economic slowdown due to the coronavirus outbreak under the newly adopted TFRS 9 framework, which became effective from January 1.
Notwithstanding observable impacts of the coronavirus pandemic on the tourism sector in February and a mandatory lockdown, which has started to affect economic activities severely since mid-March, the loan growth of 2.9 per cent, or Bt52 billion, in the first quarter of 2020, was largely driven by the commercial segment’s working capital requirements.
Meanwhile, auto hire purchase was the main driver of the retail segment, reflecting the momentum carried over from year-end 2019, the bank said.  Credit cards and personal loans contracted by 6.1 per cent, driven by seasonal repayment and low spending volumes.
Deposits grew 6.4 per cent, or Bt100 billion, from December 2019.
The Net Interest Margin (NIM) was 3.94 per cent, up from 3.52 per cent in the fourth  quarter of 2019, due to lower cost of funds and higher yield on earning assets.
Non-Interest income decreased by 9.2 per cent, or Bt869 million, from the previous quarter, mainly because of a decrease in net fees and service income, resulting from the deteriorating retail business activities corresponding to economic downturn observed during the quarter. 
The non-performing loan ratio increased to 2.22 per cent, compared with 1.98 per cent in December 2019.
Krungsri president and chief executive officer Seiichiro Akita said, “Notwithstanding the satisfactory performance delivered in 1Q/20, underlying our balanced portfolio and prudent risk management, we expect more intense pandemic impacts in the second quarter as the coronavirus outbreak creates twin shocks on both supply and demand sides, through supply disruptions and income shocks. To mitigate the impacts on business activities and reduce interest burdens for borrowers affected by the coronavirus outbreak, the bank has reduced its key lending rates on February 8, March 24 and April 10, in addition to other immediate relief measures for all customer segments including a grace period for principal and/or interest payments, a reduction of interest payment, as well as instalment period extension.
“While it evidently appears that the business and employment impacts will be sharply adverse and the ultimate duration of the pandemic and its recovery still remain uncertain, Krungsri will step up our efforts in assisting not only customers but also society and economy on the path to recovery.” Akita added.
As of March 31, Krungsri, Thailand’s fifth largest bank in terms of assets, loans and deposits, reported Bt1.87 trillion in loans, Bt1.67 trillion in deposits, and Bt2.51 trillion in total assets.