TMB reported 9M20 net profit of THB 8,877 mn, up 58% from last year.

Wednesday 21 October 2020 09:15
TMB reported 9M20 net profit of THB 8,877 mn, up 58% from last year.

TMB reported 9M20 net profit of THB 8,877 mn, up 58% from last year. In 3Q20, the Bank increased its provision level although NPL ratio remained relatively low at 2.33% to strengthen cushion against economic headwinds. For the merge deal, integration process was well on track.

TMB or TMB Bank Public Company Limited and its subsidiaries announced today the financial performance ended September 2020. Pre-provision operating profit for 3Q20 came in at THB 8,809 mn, slightly up from the previous quarter. Provision was set at THB 6,863 mn as a preparation ahead of economic uncertainties. After provision and taxes, net profit was recorded at THB 1,619 mn in 3Q20 and accumulated to a 9-month net profit of THB 8,877 mn, an increase of 58% from last year. For the merge deal, integration process was well on track and is expected to be completed by July 2021 as plan.

Mr. Piti Tantakasem, CEO, mentioned "for the third quarter, operating performance in general was still pressured by COVID-19 situation. However, synergy realization from the merger was a supporting factor to the Bank under this challenging environment.

After the merger, TMB and Thanachart Bank have optimized their deposit and loan portfolios progressively, resulting in balance sheet synergy which allows the Bank to better manage its funding cost and yields. As a result, 3Q20 NIM of 2.92% stayed within target range, despite multiple rate cuts recently. Cost synergy realization also helped the Bank in terms of cost management, reflected by cost to income ratio which was stable at 46%. As a result, operating profit stayed relatively close to the last quarter.

To cope with COVID-19 situation, the current positions of the Bank?s liquidity, capital base and asset quality remain strong. For TMB, it has consistently improved its asset quality for years and achieved in bringing down its NPL ratio to a lower-than-industry average during past 1-2 years while Thanachart Bank has a quality loan portfolio and lower NPL level even before the merger.

In terms of debts under moratorium program, first batches of retail customers started to come out of the holiday period sequentially and most of them could resume their normal payments. The percentage of the forbearance loans at the end of the third quarter thus dropped to approximately 20% of total loan portfolio, compared to 40% in the second quarter. Moreover, the portion of loan under debt relief scheme in the following quarter is expected to reduce further as the debt relief programs for corporate and SME customers will end in late October.

Nonetheless, the Bank is aware that macroeconomic outlook remains highly uncertain. Therefore, the provision level would be elevated in the second half of the year in order to build thicker risk cushion. In 3Q20, the Bank increased provision to THB 6,863 mn, compared to THB 4,972 mn in 2Q20 although NPL ratio stayed relatively low at 2.33% from 2.34% in the last quarter. This led to an increase in NPL coverage ratio to 132% from 114%.

Apart from lifting the bar of provisioning, the Bank has focused on prudent risk management. It has monitored both normal customers and customers under relief program closely to understand their situations so that the Bank can assist them and apply risk management accordingly."

In details, TMB and its subsidiaries posted total operating income of THB 16,212 mn, down 2.2% QoQ. Operating expense was well-managed and reported at THB 7,429 mn, down 4.5% QoQ. Pre-provision profit, therefore, came in at THB 8,809 mn for 3Q20 and THB 27,462 mn for 9M20, an increase of 89.5% YoY. Amid economic impact from COVID-19 pandemic, the Bank has set aside provision on TFRS9 standard at high level of THB 16,595 mn, compared to THB 7,222 mn of 9M19. As a result, net profit for 9-month period was reported at THB 8,877 mn, up 58.3% from the same period last year.

On the deposit side, as of September 2020, it was reported at THB 1.41 trillion, down by 2.5% QoQ but up 0.6% year-to-date (YTD). Such deposit movement was in line with the Bank?s strategy to reduce Time Deposit and increase retail deposits namely No Fixed and All Free as well as a result of deposit-loan volume optimization.

For loans, the outstanding was at THB 1.36 trillion or declined 1.4% QoQ and 2.1% YTD due to a slowdown of new loans, loan repayment and the Bank?s direction to reduce portion of unsecured loans and shift toward secured loans, especially to retail loan portfolio. Currently, more than 90% of retail loan portfolio is secured loans.

As a result of deposit and loan strategy together with liquidity management, the Bank?s the Liquidity Coverage Ratio (LCR), which reflects the stock of liquid assets to support liquidity needs under severe liquidity stress scenarios, consistently stays above the BoT?s minimum requirement at 100%. The current level is around 200%.

Capital adequacy was strong and among the top tier in Thai banking industry. As of September 2020, the preliminary CAR and Tier 1 rose to 18.9% and 14.8%, well above the Bank of Thailand?s minimum requirement of 11.0% and 8.5%, respectively.