“We knew at the start of the year that 2014 was going to be exceptionally challenging for the banking sector” notes Dr. Vichit Suraphongchai, Chairman of the Bank’s Executive Committee. “Accordingly, we changed our strategy for the year to make the most of the near term opportunities available to us in terms of reducing the cost of deposits and operating expenditure. At the same time, we intensified our efforts to establish a new platform that accelerates our future build-up as the Thai economy recovers in the year ahead. The record results that we have announced today attest to the effectiveness of our approach”.
The net profit increase was driven by net interest income which soared by 10.5% year-on-year to Baht 20,842 million in the current quarter. This increase was mainly the result of lowering interest expenses on deposits, following on from the Bank’s strategy to proactively reduce its cost of deposits relative to its peer group. As with much of the banking sector, loan growth remained muted at 2.7% year-on-year; reflecting the state-of-the-economy, particularly the lackluster demand for new loans from qualified borrowers.
Although non-interest income decreased year-on-year, this was the result of an exceptional and large dividend booked in 3rd Quarter, 2013. Net fee income, however, continued to grow at 8.3% year-on-year.
In line with the Bank’s 2014 strategy, non-interest expenses decreased 3.4% year-on-year. This reduction was the result of containing the growth of discretionary expenditure through, among others, better resource deployment and process optimization. At the same time, the cost-to-income ratio in the current quarter stood at 37.6%, lower than the 38.4% level in 3rd Quarter of 2013.
Asset quality remained stable as the NPL-to-loans ratio stood at 2.11% at the end of September 2014, at the same level as the previous quarter-end but slightly higher than the 2.08% level at the end of September 2013. As the asset quality has remained stable, the Bank continued to make loan provisions at the same rate as in the two preceding quarters.
Commenting on the latest results, Khun Kannikar Chalitaporn, the Bank president noted that “it is normal in a downward credit cycle to reduce undue lending risk, and that is what the Bank has done. The early indicators, however, point to an imminent economic recovery and the Bank will proactively adjust its business strategies going forward. That said, what our current financial results demonstrate, above all, is the agility with which the Bank has responded in a fast changing landscape to maintain and enhance the sustainability of its core profits. For this achievement, the full credit must go to SCB’s engaged employees and loyal customers”.