TISCO’s 1Q20 Profit Declines by 14% to ฿1.48Bn after Setting Up Higher Provisions

Tisco Financial Group Public Company Limited (TISCO) has reported its 1Q20 consolidated financial statement through the Stock Exchange of Thailand as follows;

TISCO reported a net profit of 1,483 million baht for the first quarter of 2020, decreased 14.20%, compared to the same period of last year mainly due to a business slowdown, increasing risks and partially from TFRS9 effect.

TISCO’s non-interest income declined by 2.1% YoY, resulting from the decrease in fee income from core businesses amid economic slowdown, and the record of loss on financial instruments measured at fair value through profit or loss in accordance with TFRS 9.

Meanwhile, expected credit loss increased mainly from the extraordinary setup of ECL from an adjustment of forward looking macroeconomic assumption to reflect the current situation in accordance with the new accounting standard. Non-performing loans partially increased amid economic slowdown.

 

TISCO set up ECL at 1,049.70 million baht, accounted for 1.75% of average loans, and increased compared with bad debt, doubtful accounts and impairment losses of 108.21 million baht in the first quarter of last year.

In 2020 going forward, the expected credit loss under TFRS 9 model takes into account the potential credit loss from loans and additional risks from forward looking macroeconomic factors. The increase in ECL in this quarter was mainly resulted from the extraordinary setup of ECL from an adjustment of forward looking macroeconomic assumption to reflect the current situation in accordance with TFRS 9, approximate amount of 840 million baht. This assumption adjustment reflected a significant change during the quarter in the forward looking macroeconomic factors for full year 2020.

In addition, normal ECL also increased following the increase in non-performing loans from 2.40% to 2.56%. Hence, loan loss coverage ratio increased from 183.7% to 189.8% (YTD).

 

In the first quarter of 2020, TISCO reported NPLs amounting 6,080.60 million baht, increased by 246.16 million baht (4.2% YTD). NPL ratio increased from 2.40% to 2.56% from the end of 2019, due to the effect of the economic slowdown from the spread of COVID-19. NPL ratio of retail loans, corporate loans, and commercial loans were 3.02%, 0.73%, and 1.13% respectively.