Bangkok--19 Jan--TMB
TMB Bank reports 2006 financial results Pre-provisioning profits (before extra items) of Bt. 6.5 billion decreased by 18.7%
TMB Bank Public Company Limited (TMB) recorded a net loss of Bt12 billion for the 2006 fiscal year as a result of setting aside Bt18 billion of provisions in compliance with the new Bank of Thailand guidelines in preparation for IAS 39, and for possible loss from the Thai Assets Management Corporation (TAMC) notes.
For the year 2006, the Bank’s operating income was Bt19.2 billion compared to Bt20.1 billion in 2005. The net interest income and non-interest income were Bt15 billion and 4.2 billion, respectively with pre-provisioning profits (before extra items) of Bt. 6.5 billion for 2006.
TMB’s fee income rose by 14.4% to Bt3.8 billion while foreign exchange income achieved a 12% annual growth to Bt0.8 billion in 2006 as a result of increasing revenue from new foreign exchange booths at the Suvarnabhumi Airport and other major tourist areas. The Bank finished 2006 with Bt748.7 billion total assets, and Bt542.8 billion in loans outstanding.
The bank made significant progress in reducing non-performing loans. As a result, the total loans volume dropped marginally from Bt555.7 billion in 2005 to Bt542.8 billion in 2006 although there were substantial increases in SME and consumer loans. SME loans increased by Bt15 billion or 8% from Bt203 billion in 2005 to Bt218 billion in 2006 while consumer loans rose Bt7 billion or 10% from Bt65 billion in 2005 to Bt72 billion in 2006. Non-performing loans at the end of December 2006 dropped to Bt56 billion (10.3%) compared to Bt67 billion (12%) at the end of 2005.
Operating expenses, excluding extraordinary items, rose by 13.5% from 2005. Major items includes increases from taxes and FIDF fees due to increased business activities, increased depreciation from expanded branches, ATM’s and IT enhancement expenses. Finally, employee expenses increased by Bt800 million as the bank increased talented staff to expand its business. Meanwhile the bank also initiated early retirement scheme as part of the organization change program. Progress is underway to streamline both HR and branch network.
Mr. Subhak Siwaraksa, President and Chief Executive Officer of TMB Bank, said the total provisioning of Bt18 billion in provisioning consisted of Bt13 billion provisions in compliance with new Bank of Thailand provisioning guidelines (IAS 39) and Bt5 billion provisions for the possible loss from TAMC notes. Of the Bt5 billion in TAMC related provisioning, actual losses were Bt0.7 billion but as the bank is currently in a dispute with TAMC on the classification of the original value of the TAMC notes, the bank has decided to provide an additional Bt4.3 billion in provisioning while the dispute is being resolved.
Mr. Subhak said that 2006 was considered to be a difficult year for Thai economy e.g. political uncertainty, high fuel price, strong Baht and highly fluctuated market. All of these factors contributed to the unsatisfactory financial results. Despite these adverse conditions, the bank was still able to maintain capital adequacy ratio (CAR) at 10.4% at the end of 2006, which is higher than the Bank of Thailand’s minimum requirement ratio of 8.5%. However, since the Bank’s policy was to maintain a higher level of CAR, the management had initiated discussions with its major shareholders, the Ministry of Finance and DBS Bank of Singapore on ways to strengthen capital adequacy. The MoF and DBS Bank own 31.1% and 16.1% of TMB Bank respectively.
“We are in discussions with our major shareholders on the capital position. The Ministry of Finance has informed the bank that it will support efforts to strengthen the capital adequacy of the bank and is prepared to review our detailed business plans including a more aggressive NPL resolution program and a more vigorous corporate transformation program before making its final decision” said Mr. Subhak.
Meanwhile, Dr. Subhak also said that "DBS has indicated its desire to continue its support of TMB. It looks forward to studying the final business plan in order to make its decision on how to support TMB in its plan to raise capital adequacy.”
About TMB Bank
Founded on 8 November 1957, TMB Bank Pcl operates a commercial banking business under a license granted by the Ministry of Finance, and with consent given by the Bank of Thailand. It also operates a securities business licensed by the Ministry of Finance and agreed to by the Securities Exchange Commission.
The Bank aims to respond to the needs of its clients through its 468 branch network, 102 foreign exchange centers, 1,751 ATMs, as well as its electronics banking systems. Its business encompasses commercial banking, offshore banking, investment banking, and other businesses as permitted by the regulatory authorities, including acting as an insurance agent for its alliance insurance companies.
Listed on the Stock Exchange of Thailand, the Bank is the fifth largest, by total assets, in the Thai Banking System. As at 31 December 2006, its total assets are valued at Bt748.7 billion. The Bank’s major shareholders include the Ministry of Finance (31%), DBS Bank (16.1%) and the Thai Armed Force (4.7%).
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