Bangkok--20 Jan--Siam Commercial Bank
Siam Commercial Bank and its subsidiaries reported 2019 pre-provision operating profit (PPOP) of Baht 95.6, up 30% yoy. This strong PPOP growth from 2018 was primarily driven by the recognition of extraordinary gains from sale of SCB Life. Nevertheless, the Bank set aside higher provisions in 2019, resulting in the annual net profit (based on unaudited consolidated financial statements) of Baht 40.4 billion. The Bank also announced a special dividend of Baht 0.75 per share to be paid out in mid-February.
Net interest income grew at 3% yoy to Baht 99.4 billion. Despite falling interest rates in 2019 and a slight decline in the overall portfolio size, the Bank was able to sustain this growth momentum by rebalancing its loan portfolio towards higher margin products.
Non-interest income surged 59% yoy to Baht 66.7 billion mainly due to a large investment gain from sale of SCB Life recorded in late September. Excluding this one-off item, non-interest income would have returned to its growth trajectory of 2% yoy with improved recurring income and a new income stream from the bancassurance partnership that commenced in the fourth quarter.
Operating expenses grew at 9% yoy to Baht 70.5 billion mainly because of one-time personnel expenses to comply with the new labor law and transformation-related expenses. With the strong top-line growth of 20% yoy, cost-to-income ratio declined to 42.5%.
Non-performing loan ratio rose to 3.41% at the end of December 2019 from below 3% in the first half of 2019. This deterioration reflected a challenging business environment as economic headwinds intensified in the second half of 2019 coupled with the Bank's prudent loan classification policy.
Given the current trend on asset quality as well as economic uncertainty, the Bank set aside total loan loss provisions of Baht 36.2 billion for 2019. At the end of December 2019, NPL coverage was maintained at 134%.
The Bank's capital adequacy ratio remained strong at 18.1%. Therefore, following the SCB Life's shares sale, the Board has approved a special dividend payment of Baht 0.75 per share. The final dividend for 2019 will be reviewed and approved at the 2019 Annual General meeting in April.
Arthid Nanthawithaya, Chairman of the Executive Committee and CEO, stated: "Given the current economic uncertainties, the Bank has proceeded with caution especially in the area of loan growth by focusing on high quality segments. With the expectation of moderate loan growth for the banking sector, the Bank will continue to rebalance its loan portfolio toward higher-margin businesses with an emphasis on digital lending and wealth management, as well as improving efficiency and expense management. In addition, the Bank is leveraging new capabilities from the transformation effort and working closely with various partners and leading fintech companies to build new business models that will enhance the Bank's long-term competitiveness."