Bangkok--19 Oct--Siam Commercial Bank Siam Commercial Bank PCL announced unreviewed operating results showing a net profit of Baht 5,322 million, an increase of Baht 1,634 million (44.3% yoy), as a result of strong net interest income and continued growth in non-interest income. Net profit increased Baht 1,012 million (23.5% qoq) over the previous quarter. Operating profit (excluding allowance for doubtful accounts, income tax, and minority interest in subsidiaries) was Baht 8,434 million, an increase of Baht 2,656 million (46.0%) from Baht 5,778 million in 3Q06, and a qoq increase of Baht 1,203 million (16.6%). For 9M07 net profit was Baht 13,332 million as compared to Baht 12,082 million during the same period last year, an increase of Baht 1,250 million (10.3%), due mainly to continue growth in operating income.(Consolidated) 3Q07 2Q07 % qoq 3Q06 % yoy Operating Profit 8,434 7,231 16.6% 5,778 46.0% Allowance for Doubtful Accounts 992 1,041 -4.7% 526 88.8% Income Tax 2,073 1,867 11.1% 1,548 33.9% Minority Interest in Subsidiaries 47 13 256.8% 17 178.8% Net Profit 5,322 4,311 23.5% 3,688 44.3% EPS(Baht) 1.57 1.27 23.5% 1.08 44.3% ROE 20.4% 16.8% 15.3% ROA 1.9% 1.6% 1.5% 3Q07 Income Statement (Consolidated basis) 1. Net interest and dividend income Net interest and dividend income in 3Q07 was Baht 10,814 million, an increase of Baht 2,649 million (32.4% yoy), and a qoq increase of Baht 1,611 million (17.5%).(Consolidated) 3Q07 2Q07 % qoq 3Q06 % yoy Interest and Dividend Income 15,694 14,817 5.9% 13,875 13.1% - Loans 10,857 10,968 -1.0% 10,113 7.4% - Interbank and Money Markets 1,791 1,692 5.8% 2,041 -12.3% -Hire purchase and Financial Lease Income 1,169 1,134 3.0% 605 93.2% -Investments 1,877 1,022 83.7% 1,116 68.3% Interest Expenses 4,880 5,613 -13.1% 5,709 -14.5% Net Interest and Dividend Income 10,814 9,203 17.5% 8,165 32.4% Net Interest Margin 4.07% 3.55% 3.47% Interest income from loans was Baht 10,857 million, an increase of Baht 745 million (7.4% yoy) due mainly to loan expansion. Interest income from Interbank and money markets decreased by Baht 251 million (12.3% yoy) in line with low interest rate conditions. Hire purchase and financial lease income rose by Baht 564 million (93.2% yoy) from business expansion. Interest and dividend income from investment increased by Baht 762 million (68.3% yoy) mainly from a one-time special dividend from general investment in the amount of Baht 449 million and higher dividend income from other investments. In 3Q07, dividend income from Vayupak Fund 1 was Baht 321 million.SCB Interest Rates Jul 3, 06 Sep 26, 06 Jan 24, 07 Mar 1, 07 Apr 23, 07 May 24, 07 Jul 20, 07 Lending Rate MLR 7.50% 7.75% 7.75% 7.50% 7.25% 7.00% 6.875% Fixed Deposit rate 3-month deposits 3.25-4.25% 3.50-4.75% 3.50-4.25% 3.25-3.75% 2.75-3.00% 2.25-2.50% 2.00-2.25% 6-month deposits 3.50-4.25% 3.75-4.75% 3.75-4.50% 3.25-3.75% 2.75-3.00% 2.25-2.50% 2.00-2.25% 12-month deposits 4.00-4.75% 4.00-5.00% 3.75-4.50% 3.25-3.75% 2.75-3.00% 2.25-2.50% 2.375% Jun 7, 06 Dec 13, 06 Jan 17, 07 Feb 28, 07 Apr 11, 07 May 23, 07 Jul 18, 07 Policy Rate 5.00% 5.00% 4.75% 4.50% 4.00% 3.50% 3.25% Interest expenses were Baht 4,880 million, a decrease of Baht 829 million (14.5% yoy), mainly due to a reduction in deposit cost by Baht 1,165 million (24.5% yoy) to Baht 3,585 million, due to a declining fixed deposit interest rate. Interest on Interbank and money markets increased by Baht 236 million (95.4% yoy) due to internal liquidity management. Interest expenses on borrowing increased by Baht 101 million (14.1% yoy) due to the issue of short term debentures.With better net interest and dividend income and good deposit cost management, net interest margin (NIM) rose to 4.07% in 3Q07 from 3.47% in 3Q06 and 3.55% in 2Q07. 2. Non-interest income Non-interest income from operating businesses (excluding investment gain) for this quarter was Baht 5,902 million, an increase of Baht 1,381 million from Baht 4,522 million in 3Q06 (30.5% yoy). Details include: - Fee & service income was Baht 4,127 million, up Baht 1,004 million (32.1% yoy), mostly from higher fees from selling mutual funds, fees from bancassurance, and card business fees. - Gain on exchange was Baht 499 million, up Baht 172 million (52.7% yoy) due to higher transactions. - Profit sharing from affiliated companies was Baht 122 million, down Baht 118 million (49.2% yoy) in line with the performance of affiliated companies. - Underwriting income was Baht 651 million, up Baht 337 million (107.1% yoy) due to business expansion by affiliated companies. - Other income was Baht 504 million, down Baht 14 million (2.7% yoy). The Bank reported a gain on investment of Baht 120 million, a decrease of Baht 53 million (30.7% yoy), in line with the market situation. In all, total non-interest income was Baht 6,022 million, an increase of Baht 1,328 million (28.3% yoy). (Consolidated) 3Q07 2Q07 %qoq 3Q06 %yoy Fee and Service Income 4,127 3,782 9.1% 3,123 32.1% -Acceptances, Aval, and Guarantees 263 297 -11.3% 192 36.8% -Others 3,864 3,485 10.9% 2,931 31.8% Gain on Exchange 499 728 -31.4% 327 52.7% Income from Equity Interest in Affiliated Companies 122 93 30.9% 239 -49.2% Underwriting Income 651 638 2.0% 314 107.1% Other Income 504 485 3.9% 518 -2.7% Total Operating Income 5,902 5,725 3.1% 4,522 30.5% Gain from Investments 120 61 96.5% 173 -30.7% Total Non-Interest Income 6,022 5,786 4.1% 4,694 28.3% In comparison with the previous quarter, non-interest income from operations rose by Baht 177 million (3.1% qoq), fee and service income rose by Baht 345 million mainly from selling mutual funds and card business fees, equity interests in affiliated companies rose by Baht 29 million, underwriting income rose by Baht 13 million, and other income rose by Baht 19 million. Gain on exchange decreased by Baht 229 million due to mark to market of FX swap. With a rise by Baht 59 million in investment income, total non-interest income grew by Baht 236 million or 4.1% from 2Q07. 3. Non-interest expenses Non-interest expenses this quarter were Baht 8,402 million, an increase of Baht 1,320 million (18.6% yoy) from Baht 7,082 million in 3Q06. Key factors were: - Personnel expenses were Baht 3,041 million, up Baht 889 million (41.3% yoy) mostly from recognizing cash and deferred bonuses for the first 9 months of 2007 due to the Bank changing the method used for recording cash and deferred bonuses to the year the performance is based on. - Premises and equipment expenses were Baht 1,810 million, up Baht 225 million (14.2% yoy) due to network expansion and system development by the Bank and subsidiaries. - Taxes and duties were Baht 602 million, up Baht 138 million (29.7% yoy) along with transactions. - Fee and service expenses were Baht 710 million, up Baht 130 million (22.4% yoy). - Underwriting expenses were Baht 457 million, up Baht 310 million (211.3% yoy) in line with business transactions by affiliated companies. - Other expenses were Baht 957 million, up Baht 156 million (19.5% yoy), mostly due to marketing expenses.During the quarter the Bank booked Baht 23 million in losses from loans sold to TAMC of an affiliated company, a decrease of Baht 691 million (96.8% yoy).(Consolidated) 3Q07 2Q07 %qoq 3Q06 %yoy Personnel Expenses 3,041 2,354 29.2% 2,152 41.3% Premises and Equipment Expenses 1,810 1,792 1.0% 1,585 14.2% Tax and Duties 602 519 15.9% 464 29.7% 710 600 18.3% 580 22.4% Director Remuneration 11 47 -76.4% 13 -15.5% Contribution to FIDF 791 799 -0.9% 626 26.3% Underwriting Expenses 457 507 -9.9% 147 211.3% Other Expenses 957 1,140 -16.1% 801 19.5% Loss from Adjusting Selling Price of Loans Sold to TAMC 23 - NA 714 -96.8% Total Non-Interest Expenses 8,402 7,758 8.3% 7,082 18.6% Cost to Income Ratio 49.9% 51.8% 55.1% Compared to the previous quarter, non interest expenses were up Baht 644 million, as personnel expenses rose Baht 687 million from recognized cash and deferred bonuses for the first 9 months in 2007, premises and equipment expenses rose Baht 18 million, taxes and duties rose Baht 83 million, fee and service expenses rose Baht 110 million, while underwriting expenses dropped Baht 50 million, and other expenses were down Baht 183 million. Cost to income ratio was 49.9% in 3Q07, down from 55.1% the same period last year , and down from 51.8% the previous quarter. 4. Loan loss provision On a bank only basis, the Bank set aside Baht 900 million for loan loss provision this quarter. The provision was Baht 992 million in 3Q07 on a consolidated basis. Balance sheet as at September 30, 2007 (Consolidated basis) As at September 30, 2007, the Bank (on a consolidated basis) reported total assets of Baht 1,127,369 million, an increase of Baht 95,773 million (9.3% ytd) 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 September 30, 2007, total loans outstanding were Baht 797,543 million, an increase of Baht 49,906 million (6.7%) from Baht 747,637 million at the end of 2006. Compared to 3Q06, loans grew Baht 97,140 million (13.9% yoy). Loans written-off for 9M07 totaled Baht 5,817 million. Good loans expanded by Baht 54,306 million (7.9% ytd), while loans under the Special Assets Group dropped by Baht 4,400 million (7.5% ytd). Loan growth was broad-based. Notably, Business Banking loans, or loans for SMEs, increased by Baht 31,272 million (20.4% ytd). Retail banking loans increased by Baht 21,608 million (7.7% ytd), hire purchasing loans increased by Baht 14,620 million (28.1% ytd), housing loans increased by Baht 6,673 million (3.6% ytd), and other loans increased by Baht 315 million (0.7% ytd). Corporate Banking loans grew Baht 1,426 million (0.6% ytd).Loans Sep 30, 07 Jun 30, 07 % qoq Dec 31, 06 % ytd “Restated” Good Bank 743,308 729,417 1.9% 689,001 7.9% Corporate Banking 256,502 260,275 -1.4% 255,076 0.6% Business Banking(SME) 184,236 175,977 4.7% 152,964 20.4% Retail Banking 302,569 293,165 3.2% 280,961 7.7% -Housing Loans 190,590 188,822 0.9% 183,916 3.6% -Hire Purchase 66,715 61,409 8.6% 52,095 28.1% -Others Loans 45,265 42,945 5.4% 44,950 0.7% Special Assets Group 54,235 58,578 -7.4% 58,636 -7.5% Total Loans 797,543 787,995 1.2% 747,637 6.7% Deposits stood at Baht 809,404 million at the end of September 2007, up by Baht 17,323 million (2.2%) from Baht 792,081 million at the end of 2006. Fixed deposits decreased by 6.4%, while savings and demand deposits increased by 13.3% and 5.1% respectively. As a result, the proportion of savings deposits was 45.5% as at the end of 3Q07, against 41.0% at the end of 2006.Sep 30, 07 Jun 30, 07 % qoq Dec 31, 06 % ytd Demand 35,639 32,012 11.3% 33,922 5.1% Savings 368,035 350,994 4.9% 324,783 13.3% Fixed 405,730 404,498 0.3% 433,376 -6.4% -Less than6Months 227,188 221,281 2.7% 187,242 21.3% - 6months and Up to1Year 50,863 54,163 -6.1% 108,540 -53.1% -Over1Year 127,679 129,054 -1.1% 137,594 -7.2% Total Deposits 809,404 787,505 2.8% 792,081 2.2% Gross Loans to Deposits Ratio(consolidated) 98.5% 100.1% 94.4% Gross Loans to Deposits Ratio(bank only) 90.9% 92.8% 88.1%As of September 30, 2007, the loans to deposits ratio on a consolidated basis stood at 98.5%, an increase from 94.4% as at the end of 2006. On a Bank-only basis, the ratio was reported at 90.9% in 3Q07, an increase from 88.1% as at the end of 2006. However, the loans to deposits ratio when including borrowing on a consolidated basis stood at 90.0% in 3Q07. 2. Investments Investments totaled Baht 133,143 million in 3Q07, an increase of Baht 36,185 million (37.3%) from year-end 2006. Short-term and long-term investment increased by Baht 19,759 million (84.3% ytd) and Baht 16,221 million (23.1% ytd) respectively from debt instrument investment, while investment in associated companies increased by Baht 205 million (6.2% ytd) from additional investment in Siam Commercial Leasing PCL (SCBL), with the Bank currently holding 99.1% of SCBL shares.Sep 30, 07 Jun 30, 07 % qoq Dec 31, 06 % ytd - Short-term Investment-net 43,208 35,280 22.5% 23,449 84.3% - Long-term Investment-net 86,411 85,050 1.6% 70,190 23.1% - Investment in Associated Companies-net 3,523 3,402 3.6% 3,318 6.2% Total Investments-net 133,143 123,731 7.6% 96,957 37.3% 3. Borrowings Borrowings stood at Baht 77,078 million, an increase of Baht 32,117 million (71.4%) from year-end 2006. Short-term borrowings increased by Baht 35,366 million due to the issuance of short-term debentures, while long-term borrowings dropped by Baht 3,250 million. 4. Shareholders’ equity As at September 30, 2007, shareholders’ equity stood at Baht 107,998 million, an increase of Baht 7,438 million from year-end 2006, attributed to a net profit of Baht 13,332 million in 9M07 and gain from valuation of securities by Baht 1,144 million in line with the market situation and dividend payment of Baht 6,798 million in accordance with Shareholder’s Meeting Resolution No. 184. Book value per share at the end of 3Q07 was Baht 31.51, up from Baht 29.28 at year-end 2006, with 3,399 million shares for ordinary and preferred shares at the end of September 2007. Statutory Capital (Bank only) Total capital funds (Tier 1 and Tier 2) as at September 30, 2007 were Baht 104,084 million or 14.2% of total risk assets, 11.4% of which (or Baht 83,709 million) was Tier 1 capital. Non-Performing Loans (NPLs) (Bank only) As at September 30, 2007, net non-performing loans (net NPLs) were Baht 25,775 million or 3.6% of total loans, a decrease of Baht 1,326 million from Baht 27,101 million in 2Q07 and an increase of Baht 3,095 million from Baht 22,680 million (3.4%) at the end of 2006. In terms of gross NPLs, the amount was Baht 53,774 million of 7.2% as of 3Q07, a decrease of Baht 3,222 million from Baht 56,996 million (7.8% in 2Q07). In this quarter the Bank sold NPL portfolios worth more than Baht 5,000 million to external investors.On a consolidated basis net NPLs stood at Baht 28,141 million, or 3.6% of total loans, a decline from Baht 29,337 million or 3.9% in 2Q07. Gross NPLs were Baht 60,551 million, or 7.5%, at the end of September 2007, a decline from Baht 63,666 million or 8.0% in 2Q07. Allowance for doubtful accounts at the end of 3Q07 stood at Baht 45,402 million, a decline of Baht 2,539 million from Baht 47,941 million at the end of 2006, due mainly to NPLs sales and bad debt write-offs netting with an increase of provision during the period from the Bank’s prudent policy .(Bank only) Sep 30, 07 Jun 30, 07 Dec 31, 06 Amount Allowance for Amount Allowance for Amount Allowance for classified loans classified loans classified loans Classified loans and Allowance for Doubtful Accounts Normal 674,136 8,580 667,999 8,729 636,692 10,856 Special Mention 14,017 1,192 9,866 1,149 9,270 396 Substandard 8,666 1,747 7,392 3,181 5,831 3,095 Doubtful 8,571 3,917 8,025 3,559 10,690 3,132 Doubtful Loss 36,537 15,932 41,580 18,620 36,168 19,079 Total 741,926 31,368 734,862 35,238 698,651 36,559 General and Specific Allowance 14,034 12,666 11,382 Total Allowance 45,402 47,904 47,941 Non-performing Loans(net) 25,775 27,101 22,680 (Substandard and lower) %of Total Classified Loans 3.6% 3.8% 3.4%