BANKING / EARNINGS RESULTS AND OUTLOOK

Bank profits mostly fall in first quarter

NPLs rise due to slowing economy

DARANA CHUDASRI

Market leader Bangkok Bank reported first-quarter consolidated profits of 4.63 billion baht yesterday, down 11% from profits of 5.18 billion the year before.

Profits for the bank alone totalled 4.66 billion baht in the first quarter, up from 4.63 billion the same period last year.

Earnings for local banks have generally fallen in the first quarter compared with last year, but have picked up from the fourth quarter on stronger interest margins and lower provisioning expenses.

Therapong Vachirapong, an analyst at Phatra Securities, said bank results overall were in line with market expectations.

''One worry is that in the first quarter, we saw non-performing loans rise across the board, reflecting the economic slowdown,'' he said. ''Non-performing loans, asset quality and the economy will be concerns through the rest of the year.''

Mr Therapong said one fear was that even with interest rates on the downturn, banks could cut back in their lending due to asset quality concerns, leading to a possible credit crunch that would worsen economic conditions.

For Bangkok Bank, net profits rose 27.5% from the previous quarter, with net interest margins of 3.15% at the end of March. The bank set aside 1.315 billion baht in provisions in the first quarter, on par with the same period last year and sharply lower than the one-time adjustment of 5.9 billion booked in the fourth quarter of last year.

Tax expenses in the first quarter also rose to 2.19 billion baht, compared with 349 million in the fourth quarter when the bank enjoyed special deductions.

Loans rose slightly to 959.24 billion baht at the end of March, with non-performing loans stable at 89.32 billion, or 9.2% of total loans. Non-interest expenses fell 8.7% year-on-year to 8.16 billion baht in the first quarter.

Krung Thai Bank, the second largest in terms of assets, reported first-quarter profits of 4.4 billion baht, down 5% from 4.64 billion the same time last year.

Net interest and dividend income fell 5.68% from the year before, while pre-provisioning net profits dropped 23.81% year-on-year to 5.5 billion baht in the first quarter. The state-owned bank set aside 1.1 billion baht in loan provisions in the first quarter, with gross non-performing loans up 5.5% for the first three months to 94.62 billion baht, or 9.82% of total loans.

Kasikornbank reported first-quarter consolidated profits of 3.87 billion baht, up 7% from 3.61 billion last year. Net interest and dividend income rose 4.77% to 8.823 billion baht, while non-interest income rose 35.53% to 4.2 billion.

The bank's net interest margin for the fourth quarter was 3.97%, down from 4.05% at the end of 2006, due to declines in deposit and lending rates. The bank had loan growth of 1.12% in the first quarter, with 1.025 billion baht worth of new provisions set aside in the quarter.

Non-performing loans rose slightly to 7.14% of total loans at the end of March compared with 6.84% at the end of 2006, reflecting the weaker economy.

Prasarn Trairatvorakul, Kasikornbank's president, said first-quarter results generally exceeded market expectations.

''When the economy slows, we must grow sensibly and pay attention to asset quality,'' he said, adding that the rise in non-performing loans reflected both the slowing economy and the bank's more prudent approach to restructuring bad debt.

''The increase mirrors prevailing market conditions in a slowing economy. This clearly justifies our cautious approach to asset expansion,'' he said.

Other banks reporting yesterday include ACL Bank, with first-quarter profits of 115.4 million baht, down 50% from 230.78 million last year. It blamed an 80-million-baht provision for litigation and added operating expenses from the bank's branch expansion.

Standard Chartered Bank (Thai) reported first-quarter profits of 707.8 million baht, down 46% from profits of 1.31 billion last year. It attributed this to last year's one-off release of provisions and exchange revaluation gains.

On a quarterly basis, first-quarter net profits rose by 34% from the fourth quarter of 2006. Total income for the first quarter rose 7% year-on-year to 3.24 billion baht.

Bangkok Post

Last Updated : Saturday April 21, 2007