Earnings from the first quarter indicated that the current upsurge in Thai banking was set to continue, with lenders reporting a net profit of THB60,281 million, an increase of 13.33% from the same period previous year. This rise in profits was driven mostly by lowered provisions for loan losses and higher interest rates.
In the first three months of the year, all of the major banks reported outstanding earnings, with Bangkok Bank (SET: BBL) achieving the most profit growth of 42% year-on-year thanks to the growth of loans, the interest rate hike cycle, and the reduction of expected credit losses (except for Siam Commercial Bank (SET: SCB) and Kasikorn Bank (SET: KBANK), which have extra provisioning set aside.)
BBL reported a net profit in the quarter of THB10,129 million, an increase of 42.30% from the same period of last year. An increase was mainly due to an increase in net interest income due to higher loan volume and the rising interest rate, offset by higher interest cost from the rise in deposit rates and the FIDF fee. Operating expenses increased, partly from higher expenses for working stream development and improvement. The Bank set aside additional expected credit losses in accordance with its prudent approach.
TMBThanachart Bank (SET: TTB) posted a net profit of THB4,295 million in 1Q23, up 34.4% from the same period of last year, driven by top line growth, cost efficiency, and controllable asset quality.
TTB recorded THB13,502 million of net interest income (NII) in 1Q23, an increase of 8.8% YoY from THB12,409 million. Interest income rose by 17.8% YoY from THB15,677 million. The rise was primarily due to better yield on earning assets following a rising rate environment amidst conservative loan growth.
Krung Thai Bank (SET: KTB) earned a net profit of THB10,066 million, an increase of 14.6% YoY mainly due to an increase in pre-provision profit of 24.0% YoY in alignment with KTB’s strategy to “Accelerating Sustainable Value Creation”. This is mainly from a consistent and solid uplift in total operating income of 18.8% YoY from quality loan growth focus in addition to the continual increase in net fee and service income and other non-interest income.
SCB announced consolidated net profit of THB11.0 billion for the first quarter of 2023, up 9.5% YoY, while pre-provision operating profit went up 12.0% YoY to THB24.1 billion on the back of robust growth in net interest income. The Bank set aside provisions of THB9.9 billion, up 13.5% YoY, to preemptively provide a cushion for risk that may arise from a specific corporate customer. The non-performing loan (NPL) coverage ratio remained high at 163.8%.
The overall loan quality showed a continuous improvement, as the NPL ratio stood at 3.32% at the end of March 2023, down from 3.34% at the end of 2022. The capital adequacy ratio remained strong at 18.6%.
Meanwhile, KBANK reported a net profit of THB10,741 million in 1Q23, up 236.63% on a quarterly basis, but down 4.19% from the same period of 2022. The figure was relatively in line with analysts estimates in Refinitive for a decline of 3.48% YoY and an increase of 239% QoQ.
Globlex Securities still maintains a bullish outlook on the banking sector, stating that a sustained recovery in the economy will boost demand for loans. The brokerage has a “Overweight” rating on Thai banks and selected BBL, SCB, KBANK, KTB, and TISCO as Top Picks.
