Ms. Kattiya Indaravijaya, Chief Executive Officer of KASIKORNBANK, said the Thai economic situation recovered slightly in the third quarter of 2020 in line with fading negative impacts from lockdown measures implemented during the COVID-19 pandemic. However, overall economic activity remained weaker than pre-pandemic levels, especially in the tourism and export sectors. Private spending was still subdued amid concerns about income and employment, despite government efforts to relieve economic pressure to some extent. Given lingering uncertainties, the Thai economy will continue contracting in the second half of this year.
Since 1 January 2020 the Bank and its subsidiaries initially adopted TFRS related to financial instruments (included TFRS 9) which affect to classification, measurement of financial assets and financial liabilities, impairment of financial assets and hedge accounting. In addition, the financial statements are prepared in accordance with the Bank of Thailand notification which some items are not comparable with the financial statements and key financial ratios of previous period.
Operating performance for the nine-month period of 2020, KBank and its subsidiaries reported net profit of Baht 16,229 Million, and reported net profit of Baht 6,679 Million, for the third quarter of 2020.
Operating performance for the nine-month period of 2020 compared with the same period of 2019, KBank and its subsidiaries reported net profit of Baht 16,229 Million, a decrease of Baht 13,695 Million or 45.77% over the same period of 2019, mainly due to the fact that KBank and its subsidiaries comply continuous prudent approach to set aside higher expected credit loss from the preceding period of Baht 17,692 Million or 70.24% with prudent consideration on factors from uncertainties of economic contraction from the COVID-19 pandemic together with government and institution measures to support customers affected by COVID-19 that the Bank has closely monitored asset quality, although net interest income increased by Baht 5,301 Million or 6.87% mainly from loan growth and TFRS 9 revenue recognition concept which interest income and fees income related to loan shall be calculated by using effective interest rate method. In addition, Contributions to Financial Institutions Development Fund (FIDF) decreased and interest expenses from deposits from customers decreased as a result of a decrease in average interest rate resulting in NIM that stood at 3.34%. Moreover, non - interest income decreased by Baht 8,085 Million or 19.41% mainly due to fees income related to loan which change to reflect in interest income and revenue from sale of securities decreased. Other operating expenses decreased by Baht 1,829 Million or 3.55% mainly due to employee expenses, premises and equipment expenses and marketing expenses, while debt management expenses increased, resulting in the cost to income ratio that stood at 42.87%.
Operating performance for the third quarter of 2020 compared with the second quarter of 2020, KBank and its subsidiaries reported net profit of Baht 6,679 Million, an increase of Baht 4,504 Million or 207.01% from the preceding quarter. Net interest income increased by Baht 173 Million or 0.64% mainly due to a decrease in interest income from loans to customers and interest expenses from deposits from customers, resulting in NIM that stood at 3.17%, while non - interest income decreased by Baht 4,593 Million or 32.60% mainly due to mark to market of investments according to market condition. Other operating expenses increased by Baht 651 Million or 4.12% mainly due to estimated employee expenses, resulting in the cost to income ratio that stood at 44.75% in this quarter. Moreover, KBank and its subsidiaries set aside lower expected credit loss by Baht 9,377 Million or 46.44%, mainly due to in the preceding quarter KBank and its subsidiaries set aside high level of expected credit loss from assessment and preparation complying continuous prudent approach to support uncertainties of economic contraction from the COVID-19 pandemic together with government and institution measures to support customers affected by COVID-19.
As of 30 September 2020, KBank and its subsidiaries? total assets were Baht 3,545,648 Million, an increase of Baht 251,759 Million or 7.64% over the end of 2019, which the majority came from loans. As of 30 September 2020, NPL gross to total loans stood at 3.95%, while at the end of 2019 this stood at 3.65%. The Bank has closely monitored, provided support and assured credit quality for customer affected by COVID-19. Coverage ratio as of 30 September 2020 stood at 161.12%, while at the end of 2019 this stood at 148.60%. In addition, as of 30 September 2020, KASIKORNBANK FINANCIAL CONGLOMERATE?s Capital Adequacy Ratio (CAR) according to the Basel III Accord was 18.45%, with a Tier-1 Capital ratio of 15.74%.