Thai Banks Earnings in 3Q Drop 44%, Raising Provisions for Bad Debts amid Covid-19 Crisis

The Thai banking sector, excluding TCAP, reported a total net profit for the third quarter of 2020 at 29,691 million baht, decreased 44.8% compared to a net profit of 53,833 million baht in 3Q19. Meanwhile, the banking sector recorded a total net profit in the first 9 months of 2020 at 106,838 million baht, decreased 33%.

 

Bualuang Securities (BLS) stated that most of the Thai banks earnings in 3Q20 were lower than expected due to higher provision for bad debt around 60% amid the coronavirus crisis, while expecting Thai banks to set provision for the remaining 40% in 4Q20. However, BLS pointed out that the 4Q20 earnings would be better if there is no other negative factors to pressure the sector.

 

BAY recorded a net profit of 6,114 million baht in 3Q20, decreased 6.85% compared to a net profit of 6,564 million baht in 3Q19. The decrease was mainly resulting from a decrease in net fees and service income and higher provisioning expenses corresponding to an acute economic slowdown.

 

BBL recorded a net profit of 4,017 million baht in 3Q20, decreased 57.43% when compared to a net profit of 9,438 million baht in the same period last year. The decrease was mainly due to the operating expenses increased due to Permata’s operating expenses and the provision expenses related to Indonesia branches integration. Meanwhile, net interest income continued to grow,increasing by 1,908 million baht within a low interest rate environment, due to the consolidation of Permata’s net interest income.

 

CIMBT recorded a net profit of 81 million baht in 3Q20, decreased 77% YoY, mainly resulting from a decrease in net interest income and net fees and service income compared to a year ago, along with the book of expected credit losses (ECL) of 1,251 million baht. The net profit for the nine months ended September 30, 2020 was 1,467.5 million baht, an increase of 46.3% YoY. The improvement was mainly attributed to a 7.6% growth in operating income and better cost control brought about a 0.4% decline in operating expense, partially offset by a 20.2% increase in provisions.

 

KBANK recorded a net profit of 6,678 million baht in 3Q20, decreased 32.89% compared to a net profit of 9,951 million baht in 3Q19. In 3Q20, fees and service income dropped by 17.45% from 9,456 million baht in 3Q19 to 7,805 million baht in 3Q20. Meanwhile, the bank set aside expected credit loss at the amount of 10,814 million baht for the third quarter of 2020 was the main reason for its lower net profit compared to none in 3Q19.

 

The net profit of KKP for 3Q20 totaled 1,347 million baht, an increase of 13.7% QoQ, but declined by 16.3% YoY mainly from the increased in provisions as a result of the continued uncertainties from the economic slowdown as impacted by

COVID-19.

 

KTB recorded a net profit of 3,057 million baht in 3Q20, decreased 51.89% compared to a net profit of 6,354 million baht in 3Q19. The decrease was mainly due to the expected credit losses amounted 12,414 million baht, increased 103.6% from impairment loss of loans in the same quarter of last year.

 

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%.

 

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.

 

TISCO stated that its net profit for the third quarter of 2020 totaled 1,611.53 million baht, improved by 21.2% from the previous quarter. However, compared to the third quarter of 2019, net profit decreased by 14.2%, which was the result from the economic slowdown amid the spread of COVID-19.

 

TMB reported a net profit for the third quarter of 2020 at 1,619 million baht, decreased 23.32% when compared to the same period of last year. The decrease was mainly due to a drop of 33.5% in non-interest income for the quarter and a newly recognition of expected credit loss amounting 6,863 million baht.