On the back of 3% yoy loan growth, net interest income (NII) grew 6% yoy but decreased slightly by 0.3% qoq to Baht 24.7 billion as a result of the Bank's efforts to rebalance its loan portfolio and expand high margin lending business.
Non-NII improved 10% qoq mainly driven by an increase in trading & FX income. Moreover, resumption of positive net insurance premium also contributed to strong non-NII for this quarter.
Operating expenses rose 10% yoy and 11% qoq to Baht 17.8 billion due to a one-time increase in personnel-related expenses of Baht 1.4 billion to comply with the amended labor law. Excluding the one-time expenses, the cost-to-income ratio would be 47.5% which is lower than 47.7% in the previous quarter. Overall, the Bank's expense growth, excluding the one-time expense, was well contained at merely 1% yoy and 2% qoq.
In the first quarter of 2019, asset quality continued to strengthen with a decline in non-performing loans (NPLs) and further improvement in NPL ratio to 2.77% from 2.85% in the previous quarter. In light of the additional provisions provided in the last quarter, the Bank set aside Baht 5.4 billion of provisions or 102 bps in credit cost to ensure an adequate level of buffer against the current growth momentum. NPL coverage ratio also strengthened to 152.8% compared with 146.7% in the previous quarter and the Bank's capital adequacy ratio remained strong at 17.1%.
Arthid Nanthawithaya, Chairman of Executive Committee & CEO, stated:
"Despite the impact from one-time staff costs to comply with the amended labor law, the Bank's core business engines remain resilient with great potential to strengthen further as benefits from the Transformation Program continue to be realized and more customers migrate to digital platforms. We are currently in the phase of monetizing the Transformation Program and reaping productivity gains from digitization which will drive revenue enhancement from new businesses and further reduce operational expenses over time. The Bank also adopts an agile culture on the four pillars of customer centricity, speed, innovation and risk culture to advance toward the goal of being the Most Admired Bank."