Bangkok--23 Apr--Bangkok Bank
Net profit up by 36.7 percent
Loans up by 2.7 percent
Operating expenses down by 18.9 percent ?
Bangkok Bank has recorded a consolidated net profit for the first quarter of 2012 of Baht 8.1 billion, an increase of Baht 2.2 billion or 36.7 percent from the previous quarter, and Baht 1.6 billion or 25.0 percent higher than the same quarter of the previous year.
Bangkok Bank President Chartsiri Sophonpanich said that the overall economy in this quarter was in good health. Thailand has started to recover from the flooding in the fourth quarter of last year and businesses were steadily increasing their investments. Meanwhile the government was starting to put in place focused short and long-term investment plans which will be major economic drivers.
Bangkok Bank has benefited from these public and private sector investment trends. In addition, loan demands for rebuilding and renovation arising from the flooding, and the bank’s ability to keep close to its customers, also support its credit extension. As a result, the bank’s total lending rose by Baht 39.8 billion or 2.7 percent from the end of last year, or by 15.7 percent compared with the same quarter last year, to Baht 1,510.2 billion at the end of March 2012. Loan demands in the first quarter were for working capital and long-term investments from various business sectors and customer segments, especially from large corporate and medium-sized SMEs.
The bank continues to maintain its quality of loans. At the end of March 2012, non-performing loans (NPLs) were Baht 42.9 billion, representing 2.6 percent of total loans, compared with 2.7 percent of total loans at the end of last year.
The bank set aside provisioning expenses for the quarter of Baht 1.5 billion, a decrease of Baht 226 million from the same quarter last year, and a decrease of Baht 5.5 billion from the fourth quarter of 2011. As a result, at the end of March 2012, the bank had loan-loss reserves of Baht 82.8 billion while loan-loss reserves coverage of NPLs was 193.1 percent.
In terms of liquidity, despite intense deposit competition, the bank was able to increase its deposits by Baht 57.6 billion or 3.6 percent from the previous year, to Baht 1,645.5 billion at the end of March 2012. The increase was due to the bank’s success in offering deposit products that meet customers’ needs, as well as its broad networks and long-standing relationships with both retail and business customers.
At the end of March 2012, the bank’s loan-to-deposit ratio had decreased to 91.8 percent compared with 92.6 percent at the end of last year. This higher liquidity will benefit the bank’s competitiveness in an environment of steadily increasing loan demand.
In terms of capital, with the inclusion of the net profit for the second-half of 2011 and the first quarter of 2012, and the deduction of dividends to be paid in May 2012, the bank’s capital adequacy ratio and Tier 1 capital ratio were strong at approximately 15.9 percent and 12.8 percent, respectively. This capital position is sufficient for the bank to support business during the current investment cycle while ensuring the bank is well prepared for changes in capital requirements by the Bank of Thailand under Basel III in 2013.
In this quarter the bank’s interest expenses were higher due to higher contribution to the Deposit Protection Agency (DPA) and Financial Institutions Development Fund (FIDF) and also higher cost of funds from liquidity preparation. Interest income is still under pressure from constraints on price increases due to the flooding. As a result, the bank’s net interest income declined by Baht 647 million or 4.7 percent and net interest margin (NIM) declined from 2.81 percent in the fourth quarter of last year to 2.60 percent this quarter. However, the bank expects NIM to improve in line with the country’s economic recovery.
However, lower net interest income was compensated by an increase in net fees and service income, which rose by Baht 596 million or 14.6 percent from the previous quarter. Dividend income also rose by Baht 665 million. As a result, total operating income was Baht 20.9 billion, 0.1 percent higher from the fourth quarter of 2011.
Operating expenses in the first quarter of 2012 amounted to Baht 8.5 billion, a decrease of Baht 2.0 billion or 18.9 percent from the previous quarter, mainly from a decrease in personnel expenses of Baht 511 million or 10.0 percent, and a decrease in other expenses by Baht 1.6 billion or 60.7 percent. As a result, the expense to operating income ratio in the reporting quarter was 40.8 percent compared with 50.3 percent in the previous quarter.
The bank had income tax expenses of Baht 2.7 billion, an increase of Baht 5.4 billion or 204.6 percent from last quarter, due to higher tax deductible expenses in the fourth quarter of 2011. Income tax expenses declined by Baht 264 million or 8.8 percent from the same quarter last year because of the reduction in the corporate tax rate from 30 percent to 23 percent this year.
“This year, we believe the investment cycle will continue. The bank has sufficient liquidity and a strong capital base, ensuring that we have the capacities and are well-positioned to grow alongside the domestic and regional economies”, Mr. Chartsiri said.