TMBThanachart reported net profit of THB 4,735 million in 3Q23, a 27% increase from the same period last year, totaling of THB 13,596 million for the 9-month period, an increase of 31% from 2022.

Bangkok, 19 October 2023 - TMBThanachart Bank Public Company Limited or TMBThanachart (ttb) announced its financial performance for the 3rd quarter and the 9-month period of 2023 (3Q23 and 9M23). In 3Q23, net profit was reported at THB 4,735 million, an increase of 27% from the same quarter last year. For 9M23, net profit increased to THB 13,596 million or an increase of 31% from last year. Asset quality remained under control as reflected by a low NPL ratio of 2.67% and a stable risk buffer or NPL coverage ratio staying high as 144%.

Mr. Piti Tantakasem CEO of TMBThanachart mentioned “The 3Q23 operating results continued to maintain positive momentum from the first two quarters. Overall, the Bank’s revenue generation, cost efficiency, and asset quality were achieved as planned, and these helped strengthening profitability and financial position. This, in turn, allowed the Bank to uplift dividend payout rate. As recently announced, the Bank has raised an interim dividend payment to THB 0.05 per share or equivalent to THB 4.8 billion baht in total, a 150% increase from an interim payment in the previous year, and the XD date was on 9 October 2023.

As Thai economy is grappling with headwinds from both domestic and global, the Bank has maintained prudent loan growth strategy as the aggressive growth against economic headwinds could lead to asset quality deterioration and provision burdens. In addition, the Bank has gradually adjusted the lending rates to support lending customers. Given such factors, the Bank will focus on increasing the efficiency of liquidity utilization and funding cost management to enhance interest income generation and margin spread.

To manage portfolios and enhance interest income generation, key strategy is to recycle capital and liquidity. Such an approach involves the use of excess liquidity from low-yield loan repayments to fund new loan growth that offers better risk-adjusted returns.

In addition, we have ensured the quality of new loan growth by focusing mainly on existing customers and cross-selling new products such as Cash-your-Home loans, Cash-your-Car loans, personal loans, and credit cards. With this approach, the Bank could enhance loan yields concurrently ensuring loan quality as we understand customers’ track record and have better assessment of their risk profiles.

For funding cost management, the Bank pursued the pre-funding strategy as a preparation ahead of the rate hike cycle. We could expand time deposit base by over 40% in the previous year, allowing the Bank to manage funding cost as planned. However, under the rate hike cycle, depositors tend to seek for higher returns, and hence relocate their short-term savings to longer-term deposit products as well as corporate bonds. As a result, the Bank saw a decline in total outstanding deposit.

In our view, the economic outlook will remain challenging for the rest of the year. Therefore, we will maintain our prudent loan growth strategy. We also expect to see higher competition in deposit acquisition, and hence more pressure on the deposit cost. As such, striking a balance between funding cost and yield expansion would be the key consideration for our deposit strategy going forward.

The details of 3Q23 and 9M23 performance are as follows.

Total loans at the end of 3Q23 was at THB 1,363 billion, relatively flat compared to the previous quarter (QoQ). Retail loans continued its positive momentum with 0.8% growth QoQ. Key drivers were home loans, Cash-your-Home loans, Cash-your-Car loans, personal loans, and credit card, aligning with the Bank’s direction. Commercial loans, on the other hand, declined by 1.4% QoQ due to loan repayments and liquidity-recycling strategy.

In terms of deposit, the outstanding was at THB 1,329 billion, a decline of 4.7% QoQ. Key factor was a decrease in current deposits and other saving products while targeted products such as ttb all free and time deposit continued growing as planned, in line with the Bank’s funding cost and liquidity management.

When comparing to 3Q22 and 9M22 or YoY basis, operating results still showed the recovery trend, driven by the execution of loan-deposit strategy as well as the proactive management of excess liquidity and investment portfolio to capture benefit from interest rate uptrend. As a result, net interest income improved by 13.1% from 3Q22 and helped compensate a decline of 1.1% YoY in net fee income. Total operating income, therefore, was reported at THB 18,000 million in 3Q23, an increase of 10.1% from 3Q22. Overall, the 9-month operating income amounted to THB 52,630 million, an increase of 9.6% YoY.

Operating expenses was reported at THB 7,777 million in 3Q23 and THB 22,944 million in 9M23, an increase of 4.4% YoY and 5.8% YoY, respectively. The increase was aligned with business volume growth as well as the Bank’s human resource and digital investment plan. With cost efficiency, the Bank could keep costs in control and aligned with revenue generation as reflected by cost to income ratio staying at 43%, in line with target guidance.

As a result, Pre-Provision Operating Profit (PPOP) rose to THB 10,232 million or by 14.2% from 3Q22. For 9M23, PPOP was at THB 29,733 million, showing 12.1% YoY increase.

In 3Q23, the Bank set aside provisions of THB 4,354 million, relatively stable or decreasing slightly by 0.2% from the previous year. For 9M23, provisions amounted to THB 12,874 million, a decrease of 5.0% from previous year. Overall, asset quality remained under control. This could be reflected by NPL ratio staying at 2.67%, a relatively low level while the risk buffer or NPL coverage ratio remained high at 144% level.

Lastly, on the capital adequacy, the preliminary CAR and Tier 1 remained robust at 20% and 16% at the end of 3Q23. These figures were among the top tiers in banking industry and well above the Bank of Thailand’s minimum requirement for D-SIBs banks at 12.0% and 9.5%, respectively.