Bangkok--Jan 19--The Siam Commercial Bank
The Siam Commercial Bank PCL announces the preliminary results of
operation for the year ended December 31, 2004. Net profit was a record high
at Baht 18,489 million, an increase of 48.4% from Baht 12,460 million a year
earlier, driven by the increase in non-interest income including increases in
fee & service income, income from subsidiaries and gains from investment.
Net profit for the fourth quarter of this year was Baht 3,125
million, a slight decrease from Baht 3,637 million in the previous quarter.
In this quarter, investment gain of Baht 2,396 million was recorded as well
as provision for employee retirement and increase in loan loss provision.
Khunying Jada Wattanasiritham, President & Chief Executive Officer
said:
"Net profit for 2004 was the highest in our history. Investment gains
increased dramatically in line with our policy to divest non-core businesses
including those acquired through debt restructuring. At the same time, core
operating performance continues to strengthen. Loan growth was 11.4% and well
across all sectors, resulting in wider net interest margin (NIM). The Bank
also recorded continuous improvement in fee & service income and income from
subsidiaries."
Regarding the increase in loan loss provision in the last quarter
of 2004, Khunying Jada said:
"In the fourth quarter of 2004, the Bank set aside provision in
accordance with the Bank of Thailand’s guideline on past dues of more than 2
4 months and the Bank has decided not to file lawsuits in selective cases as
it is considered to be a better alternative for preservation of shareholder
value. Moreover, additional general provision was made in this quarter to
expedite the attainment of the target to set general provision at 2% of
performing loans. As a result, allowance for doubtful accounts at the end of
2004 was Baht 69,866 million or 87% of NPLs (Baht 80,340 million or 14.0% of
total loans) which is adequate to meet any contingencies including impact
from Tsunami."
Dr. Vichit Suraphongchai, Chairman of the Executive Committee added
that:
"The Bank’s policy to be a full-fledged Universal Bank and its drive
to build a strong foundation for business growth have enabled the Bank to
continue to post outstanding results and solid financial position. The Bank
is now ready to continue its growth in 2005 by emphasizing close co-operation
with our financial-service subsidiaries. The Bank will also focus on
differentiation from other banks through our wide network and a full range of
products and services to fully meet customer needs".
Significant items of operating results for the year ended 2004:
1. Net interest and dividend income
Net interest and dividend income improved 8.8% yoy to Baht 20,746
million as interest expenses declined faster than interest income. In the
fourth quarter of 2004, the Bank had Baht 5,914 million in net interest and
dividend income, an increase of Baht 740 million qoq and Baht 769 million yoy,
respectively.
(Million Baht)
2004 2003 % yoy
Interest and Dividend Income 26,718 27,439 -2.60%
- Loans 21,631 21,400 1.10%
- Interbank and money market 965 1,014 -4.80%
- Investments 4,122 5,025 -18.00%
Interest Expenses 5,972 8,364 -28.60%
Net Interest and Dividend Income 20,746 19,075 8.80%
Net Interest Margin 2.79% 2.67%
Interest on loans rose Baht 230 million yoy to Baht 21,631 million,
mainly due to loan expansion. Interest and dividend income from investment
decreased by Baht 903 million yoy to Baht 4,122 million due to the reduction
in the bond investment portfolio.
Interest expenses decreased Baht 2,392 million or 28.6% yoy to Baht
5,972 million as deposit cost declined by Baht 2,079 million from lower
interest rates during the first half of last year and the shift from fixed rate
deposits to savings deposits as a result of the Bank’s proactive strategy on
Business Cash Management. In addition, interest from short-term and long-term
borrowings declined by Baht 262 million due to the expiration of USD subordinated
convertible bond amounting to Baht 3,810 million and JPY subordinated note
amounting to Baht 1,851 million in January and November, respectively, as well
as the conversion of subordinated convertible bonds (issued in 1998 to domestic
investors) amounting to Baht 2,112 million during the year.
Higher interest income and lower cost of fund improved net interest
margin (NIM) from 2.67% in the previous year to 2.79% in 2004. In 4Q04, net
interest margin widened to 3.11% from 2.71% in the previous quarter from normal
loans and special interest income from restructured loans of Baht 450 million.
Excluding this extra item, NIM for the quarter would be 2.87%.
2. Non-interest income
Non-interest income for year 2004 was Baht 19,077 million, an increase
of Baht 9,780 million yoy . The main driver was investment gain which increased
from Baht 205 million to Baht 8,054 million this year in accordance with the
Bank’s policy to divest non-core businesses.
Besides higher investment gain, fee & service income increased
markedly by Baht 1,634 million to Baht 7,775 million or 26.6% yoy on growth in
Bancassurance, card business and Business Cash Management. Income from
subsidiaries increased by Baht 408 million to Baht 1,403 million, mostly from
better performance of securities subsidiaries on the back of the improved stock
market and profit sharing from one associated company which the Bank started to
recognize this year.
Gain on exchange was Baht 1,487 million, a decline of Baht 419 million
compared to a year earlier due to expenses on interest rate contracts. Other
income increased by Baht 309 million from gain on disposal of assets and
foreclosed properties.
(Million Baht)
2004 2003 % yoy
Fee and service income 7,775 6,142 26.60%
- Acceptances, aval and guarantees 708 669 5.90%
- Others 7,067 5,473 29.10%
Gain on exchange 1,487 1,906 -22.00%
Other income 358 50 623.50%
Total Operating Income 9,621 8,098 18.80%
Gain/loss from investments 8,054 205 3821.80%
Income from equity interest in subsidiaries/associated companies 1,403 995 41.00%
Total Non-Interest Income 19,077 9,298 105.20%
For the fourth quarter of 2004, the Bank recorded Baht 2,396 million
in investment gains from the sales of non-core businesses, compared with a loss
of Baht 16 million in the previous quarter. Non-interest income in 4Q04 increased
to Baht 5,209 million from Baht 2,260 million last quarter.
3. Non-interest expenses
Non-interest expenses in 2004 increased to Baht 16,410 million from
Baht 13,512 million a year earlier. Personnel expenses increased by Baht 1,562
million from provision for employee retirement, extra bonus, training costs and
higher employees. Premise and equipment expenses increased by Baht 708 million
mainly from the branch redesign and network expansion across the country. Other
expenses went up mostly on business promotion campaigns.
(Million Baht)
2004 2003 % yo
Personnel expenses 5,890 4,328 36.10%
Premises and equipment expenses 3,501 2,793 25.40%
Taxes and duties 1,199 1,246 -3.70%
Fee and service expenses 1,629 1,451 12.30%
Directors’ remuneration 69 40 74.30%
Contribution to the FIDF 2,459 2,343 4.90%
Loss in diminution in value and reserve for selling expense of foreclosed properties 0 390 -100.00%
Other expenses 1,662 923 80.20%
Total Non-Interest Expenses 16,410 13,512 21.40%
Operating Cost to Income Ratio 54.00% 48.30%
For 4Q04, non-interest expenses increased by Baht 1,003 million to
Baht 4,882 million, due to increases of Baht 716 million in personnel expenses,
Baht 112 million in fee and service expenses, Baht 103 million in other expenses,
Baht 40 million in premise and equipment expenses and Baht 34 million in taxes
and duties.
Operating cost to income ratio in 2004 rose to 54.0% from 48.3% last
year. The ratio for 4Q04 was increased to 57.8% from 50.7% in the previous quarter
due mainly to the provision for employee retirement.
4. Loan loss provision
In 4Q04, additional provision was set in accordance with the Bank of
Thailand’s guideline that requires banks to provide more provision for past dues
of more than 24 months against which lawsuits are not filed. This is in line with
the Bank’s policy for certain NPLs under debt restructuring. In addition, further
general provision was set according to the target to have general provision equal
to 2% of performing loans. As a result, additional provision in this quarter was
Baht 3,100 million or Baht 4,900 million for 2004. As at December 31, 2004, loan
loss provision totaled Baht 69,866 million and loan loss coverage ratio was 87.0%.
Balance sheet as at December 31, 2004
1. Loans and Deposits
As at December 31, 2004, total loans outstanding before allowance for
doubtful accounts were Baht 563,872 million, an increase of Baht 57,579 million
or 11.4% from the end of last year. Compared to previous quarter, total loans
declined by Baht 1,258 million or 0.2%.
From end 2003, good loans expanded by Baht 78,267 million or 19.9%.
Compared to last quarter, good loans expanded by Baht 4,467 million or 1.0%.
Loans under Special Assets Group dropped by Baht 20,688 million or 18.4% from
end 2003, Baht 5,724 million of which was reduced during the fourth quarter.
Loan growth was broad-based. Retail loan growth remained robust, up
Baht 39,075 million or 33.5% from the end of last year. Corporate loans grew by
Baht 20,542 million or 10.4%, while SME loans increased by Baht 18,651 million
or 23.5% from end 2003.
(Million Baht)
Loans 12/31/2004 12/31/2003 % yoy
Good Bank 471,881 393,613 19.90%
- Corporate 218,056 197,514 10.40%
- SME 98,030 79,379 23.50%
- Retail 155,795 116,720 33.50%
Bad Bank 91,992 112,680 -18.40%
Total Loans 563,873 506,293 11.40%
At the end of 2004, deposits stood at Baht 624,718 million, up Baht
17,586 million or 2.9% from end 2003. In the fourth quarter, deposits declined
by Baht 23,904 million or 3.7% from the previous quarter.
(Million Baht)
Deposits 12/31/2004 12/31/2003 % yoy
Demand 27,085 25,760 5.10%
Savings 317,202 278,448 13.90%
Fixed
- Less than 6 months 196,544 211,106 -6.90%
- 6 months and up to 1 year 17,241 18,951 -9.00%
- Over 1 year 66,648 72,867 -8.50%
Total Deposits 624,718 607,132 2.90%
Gross Loans to Deposits Ratio 90.30% 83.40%
Net Loans to Deposits Ratio 79.10% 73.20%
Net loans (after loan loss reserve) to deposits ratio improved to
79.1% from 73.2% at end 2003 as loan growth outpaced deposit growth.
2. Investments
Investments totaled Baht 130,769 million, a decline of 11.4% from the
end of 2003 or 5.8% from the previous quarter in accordance with the Bank’s
policy on investment.
(Million Baht)
Investments 12/31/2004 12/31/2003 % yoy
- Short-term investment-net 30,123 37,815 -20.30%
- Long-term investment-net 81,939 95,526 -14.20%
- Investment in subsidiaries and associated companies-net 18,706 14,258 31.20%
Total Investments-net 130,769 147,600 -11.40%
. Borrowings
Borrowings decreased by Baht 7,833 million or 32.6% from end 2003 to
Baht 16,210 million. The decrease was due to the maturity of USD subordinated
convertible bonds amounting to Baht 3,810 million in January, JPY subordinated
note amounting to Baht 1,851 million in November and the conversion of Baht
2,112 million in subordinated convertible bonds (issued to domestic investors)
into ordinary shares during the year.
4. Shareholders’ equity
At December 31, 2004, shareholders’ equity stood at Baht 82,035
million, equivalent to book value per share of Baht 24.52 (ordinary and
preferred shares at end of December 2004 totaled 3,346 million shares).
Shareholders equity rose by Baht 6,511 million from the end of last year.
Principal items are listed as follows:
Baht 18,489 million increase from profits for the year.
Baht 6,448 million increase from conversion of subordinated
convertible bonds and the warrant exercise.
Baht 13,910 million decrease from smaller surplus on investment
revaluation due to sales of investment and decline in stock values in line
with market condition
Baht 4,486 million decrease from dividend payment in April
Total Capital Funds
Total capital funds (tier 1 and tier 2) at December 31, 2004 were
Baht 85,569 million or approximately 15.3% of total risk assets, of which
about 11.4% or Baht 63,374 million was tier 1 capital (excluding 3Q04 and
4Q04 net profit of Baht 6,761 million).
Non-Performing Loans (NPLs)
As at December 31, 2004, non-performing loans (NPLs) according to
the Bank of Thailand's definition were Baht 80,340 million or 14.0%, compared
to Baht 89,769 million or 17.5% at the end of 2003.
(Million Baht)
12/31/2004 12/31/2003
Amount Allowance for Amount Allowance for
classified loans classified loans
Classified loans and Allowance for Doubtful Accounts
Normal 484,262 6,375 416,383 11,965
Special Mention 9,086 72 6,945 54
Substandard 4,711 412 5,404 791
Doubtful 5,476 750 11,260 2,106
Doubtful Loss 70,152 38,680 73,105 31,956
Total 573,688 46,290 513,097 46,872
General and Specific Allowance 25,208
Total Allowance 72,080
Non-performing Loans 80,340 89,769
(Substandard and lower)
% of Total Classified Loans 14.00% 17.50%
Remark: Non-performing Loans (NPLs) are loans classified as substandard
and lower, including loans to financial institution but excluding accrued interest
receivable and other assets End.