Bangkok--20 Apr--Siam Commercial Bank
Robust Loan Growth and Investment Gain drive record high net profit
SCB announced today an all-time high quarterly net profit of Baht 13.1 billion for the first quarter of 2011 - a dramatic 104.7% year-on-year leap in net profit. Excluding the one-time investment gain of Baht 5.1 billion, net profit from normal operations in the first quarter stood at an all-time high of Baht 8.0 billion, as a result of both robust year-on-year loan growth of 20.1% and a record 31.2% growth in Non-Interest Income. Concurrently, loan quality continues to improve as NPL’s dropped to 3.05% of total loans — the lowest level since the Asian Economic crisis in 1997.
Commenting on these stellar results, Dr Vichit Suraphongchai, Chairman of the Bank’s Executive Committee, noted that “the results attest to the strong competitive positioning of the Bank in a better than expected Thai economic environment. Over the past several years, the Bank has dramatically transformed its business model and core strategies in all key business areas and the results speak for themselves. We are excited by the market potential in all business segments and our new capabilities provide a solid foundation to continue to outperform the sector. Indeed, these results underscore the on-going successful transformational journey, commenced a decade earlier, which will continue to unleash many new engines of competitive growth in the years ahead”.
The Bank recorded a sharp increase in loan growth in the quarter — 20.1% year-on-year and 6.6% year-to-date — as loans grew by about Baht 69 billion during the first quarter, to close at Baht 1,128 billion at the end of the quarter. This sharp year—on-year loan growth was balanced across all business segments as Wholesale, SME and Retail loans grew by 22.4%, 28.4% and 17.5% respectively. This strong growth led to a higher Net Interest Income during the quarter — 14.4% year-on-year — further boosting net profit.
The Bank’s Non-Interest Income, excluding the one-time investment gain, grew by 31.2% year-on-year, benefiting from strong growth in fee income, substantially higher underwriting income, and robust income growth from Treasury and FX related services.
The substantial one-time, non-cash investment gain arose from the acquisition of additional shares Siam Commercial New York Life Public Company Limited, increasing the Bank stake from 47.33% to 94.66%. As a result of this additional acquisition and in compliance with the new Thai accounting standard, the Bank was required to revalue its existing share-holding of 47.33% to a fair market value (using the acquisition price as a basis), resulting in a one-time, non-cash investment gain and an additional profit of Baht 5.1 billion.
Finally, the Bank reported its lowest post-crisis level of NPLs — 3.05% of total loans at the end of March. This continuing improvement to loan quality has led to lower provisioning and higher NPL coverage ratio which stood at 110.6% at the end of the quarter, compared to 107.5% at the end of the last quarter. The Bank expects this trend to continue.
Khun Kannikar Chalitaporn, the Bank president, noted that “the exceptional results represent the collective outcome of the efforts of the employees of the Bank, working together, to deliver effective and timely financial solutions across its large customer base. It is this interplay between highly engaged employees and customers that drives the Bank’s market leading performance today and will do so in the years ahead. Also, it provides a catalyst for delivering exceptional shareholder value, a platform for making enduring contributions to the community and the basis for emerging as Thailand’s premier universal bank”.