LHFG’s 3Q Profit Plunges to ฿523Mn as ECL Jumps 58% and NPL Rises to 2.8%!

LH Financial Group Public Company Limited (LHFG) has reported its 3Q20 consolidated financial statement through the Stock Exchange of Thailand as follows;

LHFG recorded a net profit of 523 million baht in 3Q20, declined 31.82% compared to a net profit of 767 million baht in 3Q19. The decline in net profit for the quarter was mainly from the increase in expected credit losses by 57.8%.

 

In the third quarter of 2020, net interest income amounted to 1,135.5 million baht or increased by 3.5% from the third quarter of 2019. Interest income was 1,889.6 million baht, decreased by 12.6% and interest expenses were 754.1 million baht, decreased by 29.2% from the third quarter of 2019.

Interest income decreased because LHFG reduced the loan interest rate to assist customers impacted by COVID-19 pandemic together with more conservative loan approval. However, LHFG’s interest expenses dropped from the reduction of the contribution to the Financial Institutions Development Fund (FIDF) from 0.46% per year to 0.23% per year according to the governmental measures during the year 2020-2021.

 

In the third quarter of 2020, LHFG showed the expected credit losses (ECL) in the amount of 709.1 million baht or increased by 57.6% when compared to 450.0 million baht in the third quarter of 2019 according to the previous standard.

The purpose of ECL is to allocate a provision in accordance with Thai Financial Reporting Standard No. 9: Financial Instruments (TFRS 9), the bank has considered the expected credit losses according to TFRS 9 and notification of the Bank of Thailand.

 

As of 30 September 2020, LHFG had non-performing loans (Gross) in the amount of 5,377.5 million baht, increased by 2,234.1 million baht or 71.1% from the end of the year 2019, which reported at 3,143.4 million baht. NPL ratio was at 2.80% of total loans (including interbank and money market items) when compared to the end of the year 2019 at 1.55%.