Bangkok--21 Oct--The Siam Commercial Bank
In an atmosphere of much turmoil in the financial markets, the SCB group’s financial results have continued to show strength. Net profit excluding investment gains/losses stood at Baht 5.8 billion for Q3/08, compared to Baht 5.2 billion in Q3/07 and at par with the Baht 5.8 billion earnings in Q2/08. The Bank’s decision to dispose its foreign investment early on in light of the world market turmoil has minimized its loss impact, resulting in the net profit of Baht 4.8 billion in Q3/08, 9% below Q3/07 and 17% below Q2/08. At the same time, the Bank announced that its capital adequacy ratio stood at a record high of 17.1% at the end of September 2008, reflecting its solid financial positioning to withstand the expected economic slowdown.
Commenting on the results, Dr. Vichit Suraphongchai, Chairman of the Bank’s Executive Committee noted that “the unfolding turmoil in the global financial markets presents strong challenges to all financial institutions worldwide. Nevertheless, SCB is solidly positioned to withstand these adverse shocks, in part, due to the success of its transformational change program and, in part, due to the strong risk management culture that the Bank has embraced as a result of this transformation.
The most apparent demonstration of the SCB Group’s repositioning of its franchise is in its ability to maintain net profit excluding investment gains/losses at a high level. Net interest and dividend Income has continued to grow at 4.9% yoy on the back of good lending growth (11.5% yoy) and continued high margins (3.96 in Q3/08 vs. 3.92 in Q2/08). Also, fee and service income was at par with Q2/08 and has continued to grow at 4.2% yoy. Net profit excluding investment gains/losses of the Bank were at Baht 5.8 billion for both Q3/08 and Q2/08 compared to Baht 5.2 billion for Q3/07
The Bank decision to dispose its investment in Lehman Brothers and two other investment banks early on is reflected in the Baht 732 million loss on investments. When additional losses arising from the disposal or mark down of domestic equity investments by two subsidiaries are taken into account, the loss from investments rose to Baht 971 million. After adjusting for this investment loss, the consolidated net profit in Q3 was Baht 4.8 billion, compared to Baht 5.3 billion in Q3/07 and Baht 5.8 billion in Q2/08.
Finally, the Bank reported that its Capital Adequacy Ratio stood at a record high of 17.1% - well above the 8.5% minimum regulatory requirement. This high ratio is the result of strong underlying profitability of its franchise, the higher proportion of retail lending, and the generation of exceptional returns in the past few years. More specifically, the Tier I ratio stood at 12.4% and the Tier II ratio stood at 4.7% at the end of the current quarter. This high level of capital provides the Bank with a unique ability to compete effectively in the expected economic slowdown.
Commenting on the results, the Bank President, Mrs. Kannikar Chalitaporn, stated that “despite the on-going upheaval in the world financial markets, the third quarter results reflect the ability of the Bank to self-insure, to an extent, against adverse shocks through adopting a fundamentally sound business model and adopting strong risk management practices”. She added that “much of the excesses of the current global credit bubble were caused by complex innovation and poor risk management. In this climate we have adopted a policy of, underwriting prudence and reporting transparency to guide the Bank through these troubled waters and at the same time deliver compelling value propositions to customers and shareholders”.
The Siam Commercial Bank pcl is the leading universal bank in Thailand. It was established by Royal Charter in 1906 as the first Thai Bank and, as at September 30, 2008, had the highest market capitalization among the Thai Financial Institutions (Baht 237 billion). It has the largest branch (929), exchange booth (141) and ATM (5,840) network in the country attesting to its dominant position in the retail financial services marketplace. It has a diverse range of Corporate, SME, Private and Retail customers nationwide and has the third highest asset size amongst the financial institutions in Thailand (Baht 1,197 Billion). Further information is available on its web site www.scb.co.th .
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