Banks’ second-quarter earnings reports continue to show a profit downswing

Net earnings reports coming from financial banks still show a sharp decline in profitability. 

Siam Commercial Bank (SCB) and its subsidiaries reported a consolidated net profit of 8.4 billion baht for the second quarter of 2020. Net profit slid 24 per cent year-on-year due to higher loan-loss provisioning. 

“The impact of the pandemic on the bank’s top-line performance and earnings outlook has started to be felt this quarter,” said Arthid Nanthawithaya, the chairman of the executive committee and the CEO of SCB.

Net interest income contracted 7 per cent year-on-year to 23.8 billion baht as a result of compressed net interest margin, while non-interest income rose 19 per cent year-on-year to 12.5 billion baht.

Operating expenses decreased 3 per cent YoY to 16.1 billion baht due to lower overall spending during the nationwide lockdown and the bank’s effective cost control measures. The bank’s cost-to-income ratio for the second quarter was relatively stable at 44.5 per cent.

The bank has issued relief programs to assist impacted customers and set aside 9.7 billion baht of provisions in the second quarter, considering the uncertainty of the COVID-19 outbreak.

Non-performing loans (NPLs) fell to 3.05 per cent at the end of June 2020 to comply with the instruction on deferral of NPL classification for loans under the Bank of Thailand’s relief programs.

NPL coverage ratio surged 152 per cent and the bank’s capital adequacy ratio remains strong at 18 per cent. 

Krungthai Bank

Payong Srivanich, the president of Krungthai Bank (KTB), reported the bank’s earnings results in the first half of 2020. The net profits for the first half of 2020 stood at 10,296 million baht, a 33.5 per cent decline from the same period in 2019.

The bank’s net profit was 3,829 million baht which was a 40.8 per cent decrease in comparison to the first quarter of 2020 due to the higher provisions.

There was also a constant reduction of interest rates on loans, resulting in Net Interest Margin (NIM) falling to 3.15 per cent, down from 3.54 per cent in the same period in 2019.

The bank set aside 23,235 million baht of provisions for credit loss, while in 2019, the bank set aside 12,891 million baht. The coverage ratio stood at 126.5 per cent and NPLs ratio-gross stood at 4.35 per cent compared to 4.33 per cent at the end of 2019.

For the second quarter of 2020, Krungthai and its subsidiaries reported an operating profit at 20,107 million baht, surging up by 14.9 per cent from its first quarter due to net interest income and other operating income.

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