Bangkok--20 Apr--Siam Commercial Bank
The Siam Commercial Bank PCL announced preliminary and unaudited operating results showing a net profit of Baht 3,699 million for
the first quarter of 2007. This figure is Baht 2,495 million higher than the previous quarter, indicating a growth rate of 207% and is Baht
523 million lower than 1Q06 (12.4% yoy).
Despite an unsettled economic situation, SCB Group performance was favorable and close to Bank targets. Loan growth was
outstanding compared to the market, with an increase of Baht 17,857 million (from 4Q06) mainly contributed by loans for SMEs (6.1% ytd) and
hire purchase businesses (10.2% ytd). Together with a rising net interest margin to reach 3.54%, net interest and dividend income grew by
4.2% qoq, with non-interest income increasing at 2.0% qoq.
Dr. Vichit Suraphongchai, Chairman of the Executive Committee, observed that in the past quarter, “The Bank was able to grow
despite the uncertainties of domestic economic conditions, reflecting SCB strengths and our readiness for dealing with competition and
change. Going forward to the remainder of 2007, SCB will maintain its strategies for increasing SME and hire purchase loans, as well as for
maintaining the Bank’s leading position in the retail banking business. The bank will also increase risk management and credit quality
schemes in order to maintain the quality of its loan growth.”
SCB President Mrs. Kannikar Chalitaporn noted that 1Q07 performance was satisfactory, with net interest margin improving to 3.54%.
Additionally, non-interest income grew from foreign exchange gains and other income from subsidiaries. The SCB President also pointed out
that for the first quarter of 2007, “SCB (bank only) set aside a general reserve of Baht 900 million, reflecting the current market
situation. At the end of 1Q07 net NPLs stood at Baht 23,428 million, or 3.4% of total loans, and the Bank will continue its policy of
decreasing NPL levels even further.”
Additional details and financial figures for 1Q07 can be found in the attached document: SCB Q12007 Summary.
ABOUT SIAM COMMERCIAL BANK (SET symbol SCB) — With over 800 branches and 4,000 ATMs, Siam Commercial Bank PCL has the largest
branch and ATM network in Thailand. The Bank delivers universal banking products through seven business groups: Corporate Banking, Business
Banking (SME clients), Retail Banking, Business Cash Management, Treasury, Private Banking, and Special Assets. The Bank also has seven
major financial services subsidiaries and affiliates: SCB Securities, SCB Asset Management, SCB Capital Services, SCB Quant Asset
Management, Siam Commercial Leasing, Siam Commercial Samaggi Insurance, and Siam Commercial New York Life Insurance. As at February 28,
2007, the Bank is the largest financial institution by market capitalization in Thailand and is ranked third by total assets. Established in
1906 as the first Thai bank, the Bank recently celebrated its 100th anniversary. The Bank aims to be the Bank of Choice for its customers,
shareholders, employees, and community by offering the most complete Universal Banking Platform in Thailand.
Significant operating results for the first quarter of 2007:
Management Discussion and Analysis
For the first quarter ended March 31, 2007
Operating profit (excluding allowance for doubtful accounts, income tax and minority interest in subsidiaries) before review by
independent auditors for the first quarter of 2007 was Baht 6,224 million, an increase of Baht 17 million or 0.3% qoq from Baht 6,207, with
a 3.4% yoy growth of Baht 204 million.
Net profit was reported at Baht 3,699 million, an increase of Baht 2,495 million or 207.3% qoq, mainly from a one-time set aside
for doubtful accounts in line with new Bank of Thailand’s accounting regulations (IAS 39) in the fourth quarter of 2006 amount Baht 5,100
million. In terms of yearly comparison, net profit in 1Q07 decreased by 12.4%, or approximately Baht 523 million, due to a higher general
reserve allowance.
Unit: Million Baht
(Consolidated) 1Q07 4Q06 % qoq 1Q06 % yoy
Operating Profit 6,224 6,207 0.3% 6,020 3.4%
Allowance for doubtful accounts 1,032 5,099 -79.8% 292 253.9%
Income Tax 1,468 -138 NA 1,455 0.9%
Minority interest in subsidiaries 25 42 -41.0% 51 -51.8%
Net Profit 3,699 1,204 207.3% 4,223 -12.4%
1. Net interest and dividend income
Net interest and dividend income in 1Q07 was Baht 8,755 million, an increase of 4.2% (Baht 351 million) from the previous quarter
and an increase of 15.9% (Baht 1,199 million) from the corresponding period last year.
Unit: Million Baht
(Consolidated) 1Q07 4Q06 % qoq 1Q06 % yoy
Interest and Dividend Income 15,088 14,889 1.3% 10,694 41.1%
- Loans 11,142 10,963 1.6% 8,075 38.0%
- Interbank and money markets 1,839 2,107 -12.7% 1,253 46.8%
- Hire purchase and financial lease income 1,059 907 16.7% - NA
- Investments 1,048 912 14.9% 1,366 -23.3%
Interest Expenses 6,333 6,485 -2.3% 3,138 101.8%
Net Interest and Dividend Income 8,755 8,404 4.2% 7,556 15.9%
Net Interest Margin 3.54% 3.39% 3.69%
Interest income from loans increased by Baht 179 million (approximately 1.6% qoq) to Baht 11,142 million due to loan expansion in
many areas. Interest income from interbank and money markets decreased by Baht 268 million (12.7% qoq) to Baht 1,839 million, in line with
low interest rate conditions. Hire purchase and financial lease income rose by Baht 152 million (16.7% qoq) to Baht 1,059 million from
business expansion. Interest and dividend income from investment increased by Baht 136 million (14.9% qoq) to Baht 1,048 million, including
to Baht 322 million in dividend income from the Vayupak Fund 1.
Interest expenses were Baht 6,333 million, a decrease of Baht 152 million or 2.3% qoq, mostly from a reduction in deposit cost of
approximately Baht 216 million (3.8% qoq) to Baht 5,442 million. This was accompanied by a declining interest rate trend for fixed deposits,
from around 3.5-5.0% during end-2006, to approximately 3.25-3.5% by the end of first quarter 2007. Interest expenses on long term borrowing
decreased approximately 21.2% qoq and interest on interbank and money markets grew 71.7% qoq due to internal liquidity management.
Better interest and dividend income growth than compared to interest expenses raised net interest margin (NIM) to 3.54% in 1Q07
from 3.39% in 4Q06. On a yoy basis, NIM decreased from 3.69% in 1Q06. Excluding the dividend from the Vayupak Fund 1, NIM stood at 3.41% at
the quarter ended March 2007.
2. Non-interest income
Non-interest income from operating businesses for this quarter was Baht 5,301 million, an increase of Baht 191 million from Baht
5,110 million in 4Q06 (or 3.7% qoq). Details include:
- Fee & service income decreased by Baht 66 million or 1.9% qoq to Baht 3,423 million, mostly from lower fees of its
securities-related subsidiary. However, fee and service income for the bank remained favorable.
- Gain on exchange increased Baht 107 million (16.1% qoq) to Baht 771 million, as a result of higher business transactions
from exchange and derivatives.
- Profit sharing from affiliated companies was Baht 89 million, down by Baht 22 million (20.2% qoq) as a result of a drop in
performances by those companies.
- Other income increased by Baht 173 million to Baht 1,019 million (20.5% qoq), due to an increase in other income from
subsidiaries, gains from selling assets, and NPA sales.
The Bank reported a gain on investment of Baht 178 million, a decrease of Baht 81 million (31.3% qoq), as a result of market
situation. In all, total non-interest income was Baht 5,479 million, an increase of Baht 110 million (2.0% qoq).
Unit: Million Baht
(Consolidated) 1Q07 4Q06 % qoq 1Q06 % yoy
Fee and service income 3,423 3,489 -1.9% 3,450 -0.8%
- Acceptances, aval, and guarantees 213 209 1.9% 229 -7.2%
- Others 3,210 3,280 -2.1% 3,221 -0.4%
Gain on exchange 771 664 16.1% 673 14.5%
Income from equity interest in affiliated companies 89 111 -20.2% 204 -56.6%
Other income 1,019 846 20.5% 548 85.9%
Total Operating Income 5,301 5,110 3.7% 4,876 8.7%
Gain from investments 178 259 -31.3% 412 -56.8%
Total Non-Interest Income 5,479 5,369 2.0% 5,288 3.6%
On a yearly basis, non-interest income (from operations) also rose by 425 million or 8.7%, with mixed results from a rise of Baht
98 million in gains on exchange, an increase of Baht 471 million in other income. With a drop by Baht 234 million from investment income,
total non-interest income grew by Baht 191 million (3.6% yoy).
3. Non-interest expenses
Non-interest expenses in the quarter increased by Baht 444 million (5.9% qoq) to Baht 8,010 million from Baht 7,566 million in
4Q06. Key factors were:
- Personnel expenses increased by Baht 644 million (27.6% qoq) to Baht 2,978 million, directly from cash and deferred bonuses
as well as yearly salary increase expenses.
- Premise and equipment expenses increased by Baht 44 million (or 2.6% qoq) to Baht 1,713 million due to network expansion
and system development.
- Taxes and duties rose by Baht 72 million (13.8% qoq) to Baht 592 million along with higher interest income.
- Fee and service expenses dropped by Baht 96 million (13.4% qoq) to Baht 616 million, mainly from a reduction in advisory
fees.
- Other expenses decreased by Baht 284 million (18.0% qoq) to Baht 1,297 million, as a result of reduced marketing expenses,
and higher expenses from a subsidiary that were in line with its business expansion.
Unit: Million Baht
(Consolidated) 1Q07 4Q06 % qoq 1Q06 % yoy
Personnel expenses 2,978 2,334 27.6% 2,998 -0.7%
Premises and equipment expenses 1,713 1,669 2.6% 1,589 7.8%
Tax and duties 592 520 13.8% 446 32.6%
Fee and service expenses 616 712 -13.4% 554 11.2%
Director remuneration 15 14 9.0% 21 -27.9%
Contribution to the FIDF 799 736 8.5% 626 27.5%
Other expenses 1,297 1,581 -18.0% 588 120.5%
Total Non-Interest Expenses 8,010 7,566 5.9% 6,823 17.4%
Cost to Income Ratio 56.3% 54.9% 53.1%
Compared to the same quarter last year, non interest expenses increased by Baht 1,186 million, as premises and equipment expenses
rose Baht 124 million, taxes and duties rose Baht 146 million, fee and service expenses rose Baht 62 million, and other expenses were up
Baht 709 million, most of which were for business network extension and marketing activities.
Cost to income ratio was up 56.3% this quarter from 54.9% last quarter, and up 53.1% from a year earlier.
4. Loan loss provision
The Bank set aside Baht 900 million in this quarter as general reserve for the bank only basis. The provision was Baht 1,032
million in 1Q07 for the consolidated basis.
Balance sheet as at March 31, 2007 (Consolidated basis)
As at March 31, 2007, the Bank (consolidated basis) reported total assets of Baht 1,077,342 million, with a Baht 45,746 million
increase (4.4% qoq) from Baht 1,031,596 million at the end of 2006. Details of the consolidated balance sheet are as follows;
1. Loans and Deposits
As at March 31, 2007, total loans outstanding were Baht 765,494 million, an increase of Baht 17,857 million or 2.4% from Baht
747,637 million at the end of 2006. Loans written-off totaled Baht 607 million in 1Q07.
Good loans expanded by Baht 18,086 million (or 2.6% qoq) while loans under the Special Assets Group dropped by Baht 229 million or
0.4% qoq.
Loan growth was broad-based. Notably, Business Banking loans (or loans for SMEs) increased by Baht 9,284 million or 6.1% qoq, and
loans for hire purchase rose by Baht 5,305 million (10.2% qoq). Corporate Banking loans grew Baht 2,517 million (1.0% qoq) and housing loans
increased by Baht 4,498 million (2.4% qoq), in contrast with other loans that decreased by Baht 3,519 million (7.9% qoq).
Unit: Million Baht
Loans Mar 31, 07 Dec 31, 06 % qoq Mar 31, 06 % yoy
Good Bank 707,087 689,001 2.6% 556,839 27.0%
Corporate Banking 257,593 255,076 1.0% 242,939 6.0%
Business Banking 162,248 152,964 6.1% 113,795 42.6%
Retail Banking 287,246 280,961 2.2% 201,589 42.5%
- Housing Loans 188,984 184,486 2.4% 171,534 10.2%
- Hire Purchase 57,400 52,095 10.2% - NA
- Others Loans 40,862 44,381 -7.9% 30,055 36.0%
Special Assets Group 58,407 58,636 -0.4% 64,344 -9.2%
Total Loans 765,494 747,637 2.4% 622,667 22.9%
At the end of March 2007, deposits stood at Baht 813,183 million, up by Baht 21,101 million (or 2.7% qoq) from Baht 792,081
million at end-2006, due to the Bank’s deposit campaigns, an increase in deposits from the Business Cash Management, and higher deposits
from high-networth clients. In comparison, fixed, demand, and savings deposits increased by 1.8%, 3.5%, and 3.7% respectively. As a result,
the proportion of savings deposit was 41.4% as of the end of 1Q07, against 41.0% at end-2006.
As of March 31, 2007, the loans to deposits ratio for the consolidated basis stood at 94.1%, a slight decline from 94.4% as of
end-2006. On a Bank-only basis, the ratio was reported at 87.8% at 1Q07, a drop from 88.1% at 4Q06.
Unit: Million Baht
Deposits Mar 31, 07 Dec 31, 06 % qoq Mar 31, 06 % yoy
Demand 35,098 33,922 3.5% 35,918 -2.3%
Savings 336,702 324,783 3.7% 381,964 -11.8%
Fixed 441,383 433,376 1.8% 314,781 40.2%
- Less than 6 months 227,703 187,242 21.6% 189,721 20.0%
- 6 months and up to 1 year 95,417 108,540 -12.1% 31,027 207.5%
- Over 1 year 118,263 137,594 -14.0% 94,033 25.8%
Total Deposits 813,183 792,081 2.7% 732,663 11.0%
Gross Loans to Deposits Ratio (consolidated) 94.1% 94.4% 85.9%
Gross Loans to Deposits Ratio (bank only) 87.8% 88.1% 85.5%
2. Investments
Investments totaled Baht 121,471 million, an increase of 25.3% from end-2006, or Baht 24,514 million. Short-term investment
increased by Baht 25,291 million (107.9% qoq) from debt instrument investment, while long-term investment decreased by Baht 883 million and
investment in associated companies increased by Baht 106 million.
Unit: Million Baht
Mar 31, 07 Dec 31, 06 % qoq Mar 31, 06 % yoy
- Short-term investment-net 48,741 23,449 107.9% 24,536 98.6%
- Long-term investment-net 69,306 70,190 -1.3% 72,878 -4.9%
- Investment in associated companies-net 3,424 3,318 3.2% 5,755 -40.5%
Total Investments-net 121,471 96,957 25.3% 103,169 -17.7%
3. Borrowings
Borrowings stood at Baht 30,438 million, a decrease of Baht 14,524 million (32.3% qoq) due to a decrease of Baht 7,782 million in
short-term borrowings, and a drop of Baht 6,742 million in long-term borrowings from bond maturity.
4. Shareholder equity
As at March 31, 2007, shareholder equity stood at Baht 104,591 million, an increase of Baht 4,031 million from end-2006 attributed
to a net profit in 1Q07 of Baht 3,699 million and gain from revaluation in securities of Baht 312 in line with the market situation.
Book value per share at the end of 1Q07 was Baht 30.77 (ordinary and preferred shares at the end of March 2007 totaled 3,399
million shares), up from Baht 29.58 as of December 2006.
Total Capital Funds (Bank only)
Total capital funds (tier 1 and tier 2) as at March 31, 2007 were Baht 99,151 million or 13.9% of total risk assets, 11.1% of
which (or Baht 78,916 million) was tier 1 capital.
Non-Performing Loans (NPLs) (Bank only)
As at March 31, 2007, net non-performing loans (net NPLs) were Baht 23,428 million or 3.4% of total loans, an increase by Baht 748
million from Baht 22,680 million (3.4%) at the end of 2006. However, the Bank has already set aside adequate allowance for the increasing
amount of NPLs. In terms of gross NPLs, the net amount was Baht 54,515 million of 7.6% as of 1Q07.
NPLs of the Bank together with Chatuchak Assets Management Co., Ltd. and Siam Commercial Leasing PCL stood at Baht 25,585 million,
or 3.5% of total loans. Gross NPLs were Baht 61,489 million, or 8.0% at the end of March 2007.
Allowance for doubtful accounts at the end of 1Q07 stood at Baht 48,383 million, an increase of Baht 442 million from Baht 47,941 million at
end-2006 mainly from a net increase of provision from the Bank’s prudent policy and bad debt write offs.
Unit: Million Baht
Mar 31, 07 Dec 31, 06
Amount Allowance for Amount Allowance for
classified loans classified loans
Classified loans and Allowance for Doubtful Accounts
Normal* 653,760 9,775 636,692 10,856
Special Mention* 7,908 221 9,270 396
Substandard 6,420 3,667 5,831 3,095
Doubtful 6,405 2,433 10,690 3,132
Doubtful Loss 41,690 19,820 36,168 19,079
Total 716,183 35,916 698,651 36,559
General and Specific Allowance 12,467 11,382
Total Allowance 48,383 47,941
Non-performing Loans (net) 23,428 22,680
(Substandard and lower)
% of Total Classified Loans 3.4% 3.4%
* Note: The Bank does not apply collateral in calculating required provision in normal and special mention categories.
Explanation of impacts from accounting changes for investment in subsidiaries/ affiliated companies
The Federation of Accounting Professions under the Royal Patronage of His Majesty the King has announced changes in booking
methods for Investment in subsidiaries and affiliated companies for consolidated statements, from the equity method to the cost method, with
an effective date of January 1, 2007. As a result, there is a difference between net profit and accumulated profit in both unconsolidated
and consolidated statements. Note that the accounting changes do not impact the Bank’s fundamental and business operations.
Impact to the SCB unconsolidated statement as of January 1, 2007 were:
Accumulated profit decreased by Baht 1,568 million.
Investment in subsidiaries and affiliated companies decreased by Baht 1,662 million.
Other items of shareholders’ equity decreased by Baht 95 million.
Net profit for the period ending March 31, 2006 decreased by Baht 266 million.