Year-end bonuses for banks expected to remain steady

Business News : Monday December 10, 2007

EARNINGS / YEAR-END BONUSES

Year-end bonuses for banks expected to remain steady

DARANA CHUDASRI

Bank employees are gearing up for the holiday season with the expectation that year-end bonuses will stay on par with last year. But it's been a difficult year for many banks, with loan growth generally falling below target and profits hit by tougher provisioning rules with the adoption of the new IAS 39 standard.

Among the largest banks, Bangkok Bank, Siam Commercial Bank and Kasikornbank all posted healthy profit growth of 10-11% for the first nine months compared with the year before.

In contrast, Krung Thai Bank, TMB, Bank of Ayudhya and Bank Thai are all expected to post sharply reduced profits or losses for the full year as they bolster their loan-loss provisions.

But most expect payments to be in line with 2006. According to a compensation survey by Hewitt Associates, the banking sector was likely to pay bonuses of three months, or on par with the average guaranteed payment of 1.2 months' salary and variable bonuses of up to 2.2 months.

Chaisith Suksomboon, chairman of the labour union at Bangkok Bank, said employees at the country's largest bank received a half-year bonus payment of one month and would receive another one-month payment on Friday.

The union in August requested that the bank consider a special payment of another month to help compensate for the higher cost of living, a request to which management has tentatively approved, he said.

If the special bonus is approved, it would boost full-year bonuses for Bangkok Bank to three months, not including any additional incentive payments made to top performers.

''Management has asked to delay payment of the special bonus until January. We are asking that the payment be made with the regular year-end bonus this month however, with a final decision to be made this Wednesday,'' Mr Chaisith said.

Yaowalak Poolthong, head of investor relations at Bank of Ayudhya, said the bank would decide its final bonus payments for staff this week. Average bonuses at BAY totalled 2.25 months last year.

Ms Yaowalak said salary increases this year would be on par with 2006 at around 6%, on par with BAY's main competitors.

Staff at Kasikornbank, meanwhile, say they expect final bonuses this year to reach 3.5 months, based on the bank's return on assets and other performance indicators. Siam Commercial Bank however is expected to pay a full-year bonus of two months, while Thanachart staff are hopeful bonuses match the three months paid over the past few years.

By : Bangkok Post