SCB Books ฿4.6Bn of Profit in 3Q as CAR Remains Strong at 18.7%!

The Siam Commercial Bank Public Company Limited (SCB) has reported its 3Q20 consolidated financial statement through the Stock Exchange of Thailand as follows;

SCB reported a net profit of 4.6 billion baht, a 69% YoY decrease, for the third quarter of 2020. Net profit came down from higher normal provisions in this quarter and a one-off gain related to sale of shares in SCB Life Assurance PCL (SCB Life) recorded in the same period last year. Excluding these extraordinary items, pre-provision operating profit would have been largely unchanged YoY but net profit would have still fallen by 56% YoY.

 

Net interest income decreased 9% YoY to Baht 23.7 billion because of lower NII contribution following the SCB Life divestment as well as narrowing net interest margin mainly due to a sharp drop in interest rates following multiple rate cuts in the first half of this year. Total loans grew by 1% YoY and 3% YTD.

Excluding the one-time gain on sale of shares in SCB Life last year, non-NII growth in the third quarter would have increased 5% YoY to Baht 10.8 billion. As economic activities gradually resumed following the easing of lockdown restrictions, recurring non-interest income showed initial signs of recovery from the previous quarter with 10% qoq and 7% YoY growth.

 

Operating expenses declined 10% YoY to Baht 15.7 billion largely from effective cost control measures amid a tough economic environment. However, with revenue under pressure from the impact of the COVID-19 pandemic, SCB’s cost-to-income ratio for the third quarter increased to 46%.

 

In addition to the normal non-performing loan (NPL) formation, SCB has qualitatively downgraded the riskiest and most vulnerable customers in the relief program following a detailed loan portfolio assessment. As a result, NPL ratio rose to 3.32% at the end of September from 3.05% at the end of June.

 

Given the economic uncertainty and potential credit migration brought about by COVID-19, SCB set aside provisions of Baht 12.9 billion for the third quarter. NPL coverage was maintained at a high level of 146% and SCB’s capital adequacy ratio remains strong at 18.7%.