Jump to content

Profits at top banks fall more than 50% in 3rd quarter


Recommended Posts

Profits at top banks fall more than 50% in 3rd quarter

By The Nation

 

800_d16472094fad967.jpg

 

Profits of nine banks fell by an average 55 per cent in the third quarter this year due to their high reserves to cope with the economic impact of Covid-19.

 

Excluding Krungsri (Bank of Ayudhya), the nine commercial banks' accumulated third-quarter net profit was Bt23.57 billion, down an average 55.18 per cent from Bt82.13 billion in the same period last year. The banks' net profit in the first nine months this year was Bt87.18 billion, down 34.5 per cent from Bt133.15 billion from last year.

 

Most of the drop in profit was attributed to the rise in reserves to cope with debt defaults amid the economic slowdown.

 

The five banks showing the biggest third-quarter profit drop were CIMB Thai Bank – down 77 per cent to Bt81 million; Siam Commercial Bank – down 68.9 per cent to Bt4.64 billion;

 

Bangkok Bank – down 57.4 per cent to Bt4.01 billion; Krungthai Bank – down 51.9 per cent to Bt3.05 billion; and Kasikorn Bank – down 32.8 per cent to Bt6.67 billion.

 

The banks' total reserves for the first nine months were Bt160.62 billion, up Bt61.35 billion or 61.8 per cent year on year. The three banks with the highest reserves are Tisco Financial Group, up 591 per cent; TMB Bank (129 per cent); and Krungthai Bank (87.7 per cent).

 

Meanwhile, the nine banks' held non-performing loans (NPLs) worth a total Bt474.56 billion at the end of the third quarter, up 17.6 per cent year on year. The three banks with the highest NPLs are Krungthai Bank at Bt110.66 billion, up 0.8 per cent; Bangkok Bank at Bt107.74 billion, up 25 per cent; and Kasikorn Bank at Bt96.74 billion, up 21.9 per cent.

 

Khattiya Intharawichai, Kasikorn Bank's chief executive officer, said its net profit dropped due to a 70.24 per cent rise in reserves to Bt17.69 billion for expected credit loss during the virus crisis.

 

Arthid Nanthawithaya, Siam Commercial Bank's CEO, said SCB had assessed the quality of its loan portfolio carefully and was monitoring loan quality deterioration amid the Covid-19 fallout. The bank’s NPLs rose to 3.32 per cent from 3.05 per cent in June.

 

Kasikorn Research Centre's Kanchana Chokpaisansilp predicts banks will face more challenges in the fourth quarter this year because exports and tourism are yet to recover.

 

"We expect the banks' fourth-quarter expenses to rise more than the previous quarter from setting up of reserves to cope with future risks, which will see net profits stay in negative territory," she said.

 

"Meanwhile, banks' NPLs this year would rise more than our previous forecast of 3.5 per cent due to increasing risks," she added.

 

Source: nationthailand.com/news/30396617

 

nation.jpg

-- © Copyright The Nation Thailand 2020-10-22
 

 

 

  • Thanks 1
Link to post
Share on other sites
  • Replies 56
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Popular Posts

Oh dear, bad loans are 3x the banks reserves ........ that can't be good.

I seem to remember a story from last week saying CIMB is closing all it's ATMs. Probably to cut costs, and maybe to limit withdrawals if a run starts. I'd be moving my money out, if I were a

Worth reading: https://www.reuters.com/article/us-thailand-economy-debt/buyers-of-thai-distressed-assets-plan-big-purchases-as-debt-payment-holiday-ends-idINKBN27719E   About 6.89 trillion b

Posted Images

There was no mention of "special mention loans" which were 1.2 trillion baht at the end of Q2 2020 as reported by the Bank of Thailand on 20 August. These are loans yet to be classified as NPL, but are not up to date on their payments.

 

If all of these SMLs become NPLs, banks need to substantially increase their reserves, or maybe start limiting withdrawals or reduce operating expenses.

 

If they want to increase reserves, they will most likely issue bonds. Kasikorn, SCB and the Bank of Thailand all issued bonds, denominated in USD, in 2020, over USD$2 Billion in total, this year already.

 

 

FI_SM_001.xlsx

Edited by Banana7
  • Like 2
Link to post
Share on other sites
15 hours ago, snoop1130 said:

Arthid Nanthawithaya, Siam Commercial Bank's CEO, said SCB had assessed the quality of its loan portfolio carefully and was monitoring loan quality deterioration amid the Covid-19 fallout. The bank’s NPLs rose to 3.32 per cent from 3.05 per cent in June.

" Loan quality Deterioration " is another worrying aspect of this report.

If the Banks have Loaned Money out against Assets that are becoming less valuable IE Cars , White Goods Etc, this will cause the Banks to have a negative Asset to Loan Ratio  on their Books.

Many previously " good Assets " will also soon become less Valuable IE Houses, Etc, and if the Loans on these good Asset were given against poor evaluations of the original Asset, the Banks are really in the Doo-Doo.

If that were the case, the Banks would find it hard to borrow Money in order to prop the Sector up at competitive rates ( if at all ) because of poor Management.

 

  • Like 2
Link to post
Share on other sites

This article starts out "Excluding Krungsri..." bank. Why? Is that a good sign or a bad sign for Krungsri? It's important to me because Krungsri holds my Foreign Currency Deposit account with enough to renew my Non-O visa next month, for another year. And FCD accounts do not have deposit insurance. I'm assuming they are in good shape, partly because Japanese consortiums own about 2/3 of the bank. The Financial Summary posted on their website doesn't look too bad though of course it is not easy to interpret fully, but does anyone have any info or links?

Link to post
Share on other sites
16 hours ago, BritManToo said:

Oh dear, bad loans are 3x the banks reserves ........ that can't be good.

You are right, it is not a good look at all, however there is something which will possibly lighten the gloom on this.

 

A great proportion of the "bad loans" will be in property and although the figures look alarming, the assets that they cover can be sold thereby bringing some revenue back to the bank, so not a total loss.

 

However I do believe that the years of poor lending decisions/mates rates/lack of oversight will come back to bite some of these banks, and quite badly so.

 

I did see an article a short while ago which stated that Krungsri was the strongest of the banks in Thailand across a few measures, so I wonder if that bank will see an influx of deposits?

  • Like 2
Link to post
Share on other sites
5 minutes ago, sammieuk1 said:

But the teflon baht rumbles on and on unscathed with any calamities  🤔  

Look at the Euro for instance. Countries with huge amounts of debt plus negative interest rates and endless money printing. A wonder that the Baht is not higher... 

  • Like 1
Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    No registered users viewing this page.


×
×
  • Create New...