Bangkok--19 Jan--Siam Commercial Bank
2011 NET PROFIT AT BAHT 36.3 BILLION
Despite the epic floods of the fourth quarter, SCB announced record net profit of Baht 36.3 billion, a 49.9% year on year increase. The net profit was driven by a large one-time investment gain of Baht 5.1 billion from the acquisition of additional shares in SCB Life, strong growth in Non-Interest Income (underwriting and FX sales/trading income) and a much higher Net Interest Income (on the back of 22.1% loan growth). These profits were achieved despite the increased expenses in the fourth quarter relating to the floods in terms of customer relief, community donations, employee assistance and head-office and branch disruptions. Finally, the net profits were after the one-time, additional prudential loan related provisions in the third and fourth quarter.
Commenting on these results, Dr. Vichit Suraphongchai, Chairman of the Bank’s executive Committee noted that “the results underscore the extraordinary resilience of the Bank’s business model to unexpected events. The fourth quarter was incredibly disruptive and our focus rapidly shifted to assisting our employees, customers and communities affected by the flood. Yet, we have again delivered annual results which exceed market expectations — something that is possible only through the deep engagement we have consistently nurtured, with our customers, employees and the community, firmly anchored on an operating platform that readily adapts to the constantly shifting landscape in which we find ourselves”.
Non-Interest Income rose 37.9% to Baht 41 billion in 2011 benefiting from: a large one-time investment gain of Baht 5.1 billion mainly from the acquisition of additional shares in SCB Life in the first quarter; significantly higher underwriting income generated through bancassurance sales despite the claims sustained by the non-life subsidiary of the Bank as a result of the floods; and the strong growth in the income from FX sales and trading both from business transaction volume and retail exchange services.
Net Interest Income rose 27.1% to Baht 51 billion in 2011 mainly as the result of robust loan growth of 22.1%, the rising interest rate environment for much of the year. This was achieved despite the significant increase in funding volumes and costs given the intense competition for deposits as well as the increased reliance on the more expensive Bills of Exchange and off-shore borrowing.
In parallel, the fourth quarter, 2011 was another record for the quarter for the Bank (Baht 6.7 billion) despite the significant and unexpected impact from the customer relief programs, assistance provided to affected employees and communities, and the expenses associated with disruption at the Head Office and branches.
In line with a policy of prudence, the Bank continued to build on its provisions in the last quarter. Additional prudential provisions of Baht 2.25 billion were set aside in the last quarter, further to a similar Baht 1 billion in the third quarter. The cumulative provisions in 2011 were Baht 6.6 billion, up 41% from the previous year, even as the level of NPLs continued to drop to 2.61% from 3.25% in the past year.
The President of the Bank, Kannikar Chalitaporn, stated that “the record 2011 financial results reflect just one facet of the Bank and underscore its drive, quarter after quarter, to meet and exceed shareholder expectations. The other softer aspect of the Bank is just as important — one that reflects its deep concern for the well-being of its customers, employees and community. In this context, the speed with which the Bank responded to the flood crisis with programs and measures to alleviate the plight of those affected, is something that we feel needs to be highlighted just as much as the financial results. Indeed, it is the latter spirit that gives us the strength to deliver exceptional results that are sustainable into the future”.