In 2021, the Thai economy continued to be significantly affected by the Covid-19 pandemic, with the number of daily new infections rapidly increasing and reaching an all-time high in the third quarter. Many businesses in the hospitality and tourism sectors were affected by government measures to control the spread of the virus. In the fourth quarter, the number of new infections decreased while the proportion of vaccinated people increased, so the government eased the lockdown measures and reopened Thailand's borders to welcome foreign tourists towards the end of the year. These led to a revival of the Thai economy and private consumption. Export growth accelerated as a result of growing demand from trading partners and the continued expansion of the global manufacturing sector. However, the Omicron variant and possible mutations present potential risks that could affect Thailand's economic recovery.
Since the beginning of the Covid-19 pandemic, the government and the Bank of Thailand have regularly launched measures to help impacted businesses and individuals, support a steady economic recovery and facilitate transition to the New Normal. Bangkok Bank continues to support government measures by taking care of customers closely and understanding their current situations. The Bank believes that providing financial support and relevant advice suitable to the changing business landscape during the pandemic, as well as how to adjust business model and expansion to accommodate new opportunities, will help customers and the Bank overcome the situation in a sustainable way. At the same time, the Bank has placed importance on prudent risk management, together with maintaining its financial stability, liquidity and strong capital positions.
Amid challenging economic conditions, Bangkok Bank reported a 54.3 percent increase in net profit for 2021
In 2021, Bangkok Bank and its subsidiaries reported a net profit of Baht 26,507 million, an increase of 54.3 percent from 2020. Net interest income rose by 6.6 percent from last year due to the full-year consolidation of Permata'snet interest income and lower interest expenses resulting from cost management.The net interest margin stood at 2.10 percent. Non-interest income rose by 25.7 percent mainly due to an increase in net fees and service income from securities business,loan-related services, bancassurance and mutual funds, along with an increase on gains on mark to market of financial assets in line with the market environment.
Operating expenses rose by 2.0 percent from last year as a result of the full-year consolidation of Permata's operating expenses. Meanwhile, the cost to income ratio declined to 50.0 percent. The Bank maintained its prudent approach by setting aside expected credit losses of Baht 34,134 million to accommodate future uncertainty from the impact of the Covid-19 outbreaks, while closely monitoring the situation regarding the Omicron variant and potential risks arising from new variants.
Bangkok Bank continues to maintain a healthy financial position, high liquidity and strong capital positions under a prudent management approach to support the gradual recovery of Thailand's economy and the sustainable business operations posted Covid-19
At the end of December 2021, the Bank's total loans amounted to Baht 2,588,339 million, an increase of 9.3 percent from the end of last year, due mainly to loans to large corporate customers and loans made through the international network. The non-performing loan to total loans ratio decreased to 3.2 percent, while the ratio of the allowance for expected credit losses to non-performing loans remaining strong at 225.8 percent.
As of December 31, 2021, the Bank's deposits amounted to Baht 3,156,940 million, an increase of 12.3 percent from the end of December 2020, reflecting customers' desire to maintain highly liquid assets during a time of uncertainty. Accordingly, the loan to deposit ratio stood at 82.0 percent. In September 2021, the Bank issued 15-year Subordinated Notes qualified as Basel III-compliant Tier 2 capital amounting to USD 1 billion, which further strengthened the Bank's diverse capital structure. At the end of December 2021, the 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 19.6 percent, 16.0 percent and 15.2 percent respectively, comfortably above the Bank of Thailand's minimum capital requirements.