Bangkok--18 Oct--Bangkok Bank
In 2019, the Thai economy is forecast to expand at a slower rate than in 2018. Slowing global growth, intensifying trade tensions and the unrelentingly strong Baht have weighed on both exports and tourism. Meanwhile, private consumption and private investment slowed in line with declining car sales and a pullback in the real estate sector. The elevated household debt and the impacts from natural disasters also contributed to the decline in private consumption. A fall in manufacturing production and capacity utilization contributed to subdued private investment. Public consumption continued to grow slower than expected following a delay in forming the new administration.
Third quarter earnings up 4.5%
For the third quarter of 2019, Bangkok Bank and its subsidiaries posted a net profit attributable to owners of the Bank of Baht 9,438 million, an increase of 4.5 percent from the third quarter of 2018. It was mainly from an increase of 9.6 percent in net fees and service income, driven by higher fee from bancassurance and mutual funds according to the Bank's strategic intent. Net interest income decreased slightly by 1.7 percent as a result of loan contraction and the net interest margin stood at 2.35 percent.
Operating expense decreased marginally by 1.5 percent from the same quarter last year reflecting the well-disciplined on cost management. The cost to income ratio was 41.9 percent.
Strong balance sheet and capital position
At the end of September 2019, loan amounted to Baht 2,001,445 million, moderately decreased of 0.8 percent from the previous quarter, owing to a decline in loan to business in line with economic slowdown, coupled with some loan repayments by large corporate. The non-performing loan (NPL) ratio was at 3.6 percent with strong loan loss reserves to NPL at 183.4 percent. The Bank continued to focus on prudent control over credit underwriting and risk management to ensure loan quality and maintain the allowance for doubtful accounts at the appropriate level.
The Bank's balance sheet remained healthy with robust capital and liquidity positions. At the end of third quarter 2019, loan to deposit ratio was at 84.7 percent. On September 25, 2019, the Bank issued 15-year Subordinated Notes qualified as Basel III-complaint Tier 2 capital amounted to USD 1,200 million, which supported the Bank's well mixed of capital structure to be even stronger. As of September 30, 2019, total capital adequacy ratio, Common Equity Tier 1 capital adequacy ratio and Tier 1 capital adequacy ratio of the Bank and its subsidiaries were 20.7 percent, 17.7 percent and 17.7 percent respectively, which are comfortably above the Bank of Thailand's minimum capital requirements.