Krungsri posts 9-month net profit of 19.7 billion baht

Stocks and Financial Services Press Releases Thursday October 22, 2020 09:02
Bangkok--22 Oct--Bank of Ayudhya

Krungsri (Bank of Ayudhya PCL and its business units) announced a net profit of 19.7 billion baht for the first nine months of 2020, representing a 25.3% decrease, or 6.6 billion baht from 9M/19. The acute contraction was attributed to unfavorable operating environments together with the absence of extraordinary one-time gains on investment from the sale of 50% of share in Ngern Tid Lor Company Limited (NTL) and the provision for compensation in personnel expenses relating to severance payment in accordance with the amended Labor Protection Act in 9M/19.

Excluding the aforementioned one-off items in 9M/19, the net profit for the first nine months of 2020 decreased 4.1% from the same period of 2019, mainly caused by higher provision expenses, corresponding to a prudential safeguard to cushion against loan quality deterioration together with lower operating profits.

Key highlights of Krungsri’s consolidated 9-month 2020 results:
  • Net Profit: Recorded at 19.7 billion baht, representing a 25.3% decrease from the same period of 2019. Net profit was at 6.1 billion baht in 3Q/20, representing a 6.8% decrease from 3Q/19 and a 6.0% decrease from 2Q/20.
  • Loan Growth: Increased by 1.4%, or 25.7 billion baht, from December 2019. Krungsri’s credit assistance and liquidity measures in part contributed to the growth observed in 9M/20. Corporate loans grew by 1.6%, while SME and retail loans grew by 2.6% and 0.9%, respectively.
  • Deposit Growth: Increased by 10.4%, or 162.3 billion baht, from December 2019.
  • Net Interest Margin (NIM): Recorded at 3.63%, compared to 3.68% in the same period of 2019.
  • Non-Interest Income: Decreased by 32.9%, or 11.7 billion baht, from the same period of 2019, mainly driven by lower gains on investments due to an absence of the one-time gains on investment from the NTL transaction in 9M/19, and a decrease in net fees and service income.
  • Cost to Income Ratio: Recorded at 41.2%, improving from 42.6% in the same period of 2019, reflecting the Bank’s proactive expense management.
  • Non-Performing Loan (NPL) Ratio: Recorded at 2.24%, compared to 1.98% in December 2019.
  • Coverage Ratio: Recorded at 160.6%, compared to 163.8% in December 2019.
  • Capital Adequacy Ratio: Remained strong at 17.13%, compared to 16.56% in December 2019.

Krungsri President and Chief Executive Officer Mr. Seiichiro Akita, said “Following the relaxation of the domestic COVID-19 containment measures in the third quarter, recent economic and business activities showed signs of improvement. However, the recovery remained modest and overall economic activities remained at the level significantly lower than the pre-pandemic period.”

“As a Domestic Systemically Important Bank (D-SIB), Krungsri has continued to implement preemptive measures in alleviating financial burdens for both commercial and retail customers facing financial distress. Key priorities in 3Q/20 comprised expediting liquidity support and debt restructuring for affected businesses and households in light of the expiration of debt repayment holiday programs during the quarter.”

Commenting on the overall business outlook, Mr. Akita added, “Supported by a continued accommodative monetary policy, as well as the fiscal, financial, and credit measures, the Thai economy would continue to recover in the fourth quarter. Nevertheless, vulnerabilities remain high given the recent global intensification of the COVID-19 pandemic that could lead to the re-imposition of lockdown measures, as well as an increased risk of the deteriorating debt servicing capability of domestic businesses and households against the backdrop of weak private consumption and investment.”

“Krungsri stays focused on priorities in alleviating adverse impacts for customers, and supporting the economic recovery through both credit and debt restructuring measures as well as additional liquidity support. The asset quality will be vigilantly monitored and managed in ensuring both safety and soundness, while prudential oversights will also be strictly imposed to ensure high levels of capital fund and loan loss provision in withstanding further financial and economic challenges.” Mr. Akita added.

As of 30 September 2020, Krungsri, Thailand’s fifth largest bank in terms of assets, loans and deposits, and one of Thailand’s five Domestic Systemically Important Banks (D-SIBs), reported 1.84 trillion baht in loans, 1.73 trillion baht in deposits, and 2.49 trillion baht in total assets. The Bank’s capital was strong at 276.54 billion baht, equivalent to 17.13% of risk-weighted assets, with 12.24% in common equity tier 1 capital.

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