The Thai economic recovery in the second quarter of 2021 was affected by the third wave of the Covid-19 pandemic leading to a deterioration in various economic indicators, including consumer confidence, which fell to a 19-year low, impacting consumption and investment by the private sector. With international travel restrictions remaining in place, the tourism sector has been unable to recover. However, Thailand's exports grew strongly in line with a robust economic recovery in key trading partners and this has been a predominant supporting factor for the Thai economy, together with government spending. Thailand continues to face a high degree of uncertainty from the pandemic situation with thousands of new infections recorded on a daily basis. Given the prolonged outbreak, mutation of the virus, the fact that the proportion of vaccinated people is not yet high enough, and that the reopening of borders for tourism has just started, continual government measures are still needed to sustain the economic recovery and support affected business operators and retail debtors.
Bangkok Bank has continued to support government measures and accelerated its help to provide customers with appropriate assistance in line with their individual situations since the beginning of the Covid-19 outbreak. At the same time, the Bank has prioritized risk management, while maintaining its financial stability, liquidity levels and strong capital position.
Bangkok Bank and its subsidiaries reported net profit of Baht 13,280 million for the first half of 2021
The Bank and its subsidiaries reported net profit for the first half of 2021 amounting to Baht 13,280 million. The net interest income increased by 4.8 percent due mainly to the consolidation of Permata since May 2020, while the net interest margin stood at 2.12 percent, decreased from the same period of 2020 following multiple interest rate cut during the first half of last year. Net fees and service income rose by 18.8 percent, due to fee income from bancassurance and mutual funds services and fee from securities business, as well as the consolidation of Permata's fee income. The cost to income ratio was 49.5 percent. Meanwhile, the Bank set aside expected credit losses under its prudent approach as the Bank continued to assess the potential impact from the prolonged Covid-19 pandemic on the Thai economy and to prepare for and accommodate uncertainty.
Bangkok Bank continues to maintain a healthy financial position, high liquidity and capital positions, under its prudent management approach, in response to a delay in the economic recovery and a continued increase in uncertainties
At the end of June 2021, the Bank's total loans amounted to Baht 2,420,305 million, an increase of 2.2 percent from the end of last year, owing to increases in loans to business customers and loans made through the international network. Nonetheless the non-performing loan ratio remained at 3.7 percent. The Bank continues to set aside expected credit losses in response to the potential impacts from a prolonged Covid-19 outbreak on the Thai economy, driven a ratio of loan loss reserves to non-performing loan remaining strong at 190.3 percent.
As of June 30, 2021, the Bank's deposits amounted to Baht 3,046,985 million, an increase of 8.4 percent from the end of December 2020. The rise reflected customers' desire to maintain their highly liquid assets during a time of uncertainty. Accordingly, the loan to deposit ratio stood at 79.4 percent. In terms of capital, the Bank's total capital adequacy ratio, Tier 1 capital adequacy ratio, and Common Equity Tier 1 capital adequacy ratio of the Bank and its subsidiaries stood at 18.4 percent, 15.9 percent and 15.0 percent respectively, comfortably above the Bank of Thailand's minimum capital requirements.