Bangkok--25 Apr--Siam Commercial Bank
Siam Commercial Bank and its subsidiaries announce net profit for 1Q2016 (based on unreviewed consolidated financial statements) at Baht 10.5 billion, a decrease of 19.8% compared to the same period last year.
The operating profits stood at Baht 18.1 billion, a decrease of 9.7% from 1Q2015, following an accounting policy change by the Bank's subsidiary, SCB Life Assurance Public Company Limited. SCB Life calculated policy reserve and reclassified investment portfolio which has net gain of around Baht 3.5 billion. The company has taken into consideration of the current interest rate environment and decided to set up policy reserve for the year by Baht 7.5 billion. However, operating profit on a bank-only basis improved 9.5% yoy from higher net interest income, higher net fee income and lower operating cost compared to the same period last year. The Bank set aside Baht 5.0 billion of loan loss provisions on a prudent basis in the current quarter, 39% more than the provisions in the first quarter of last year, resulting in higher coverage ratio.
Mr. Arthid Nanthawithaya, the CEO and Deputy Chairman of the Executive Committee of Siam Commercial Bank, commented on this quarter's results as follows. "Although the economy did not fully recover, SCB still maintained its satisfactory result. The Bank has placed its priority in assisting all customer groups to continue their business with a close monitoring, and providing proactive advice particularly in terms of risk management, as well as making additional financial services available based on actual requirements and type of their business to ensure that customers get optimal benefits and strongly overcome the difficult times."
Net interest income in 1Q2016 recorded at Baht 21,670 million, an increase of 5.5% from 1Q2015. The increase was primarily attributed by an increase of 5.4% in retail credit whereas overall credit increased by 1.6%. Besides, the Bank has successfully increased proportion of saving and current accounts resulting in a decrease in cost of funds.
Non-interest income fell by 33% year-on-year following an accounting policy change at SCB Life. Excluding the impact of SCB Life as mentioned above, non-interest income increased 0.9% mainly from 6.2% increase in net fee and service income and 184% increase in investment gain.
Non-performing loans ratio in this quarter stood at 2.64%, an improvement from 2.89% at the end of 2015. However, to incorporate a reasonable quantum of prudential provisions, the Bank set aside loan loss provisions of Baht 5.0 billion, a 39% increase from 1Q2015. As a result, the coverage ratio increased to 122.8% at the end of 1Q2016 from 109.8% at the end of 2015.
Mr. Yol Phokasub, the Bank's president, said "The operating results in the first quarter, particularly with NPL reduction as well as significant increase in NPL coverage ratio reflects the effectiveness of the Bank's risk management practices in a subdued economic climate. In this environment, SME and retail segments continue to remain challenged. These risk management practices together with the advanced analytics will be the foundation for future loan growth, as the economy recovers."