TMBThanachart reported net profit of THB 3,715 million in 3Q22, up 58% year-on-year and a total of THB 10,348 million for 9-month period, an increase of 35%. Key drivers are positive momentum in revenue while provision is lower as asset quality remains under control and NPL ratio stays at relatively low level.

TMBThanachart Bank Public Company Limited or TMBThanachart announced its financial performance for the 3rd quarter (3Q22) and the 9 months of 2022 (9M22). Overall, the Bank’s operating performance continued positive momentum from the previous quarter. Key drivers were the improvement in revenue and cost discipline. On top of that, asset quality is well-managed and NPL ratio remains low at 2.72%, lessening pressure on provision expense. Net profit, therefore, was recorded at THB 3,715 million in 3Q22, an increase of 57.5% from 3Q21 and THB 10,348 million for 9M22, an increase of 34.8% from the same period last year.

Mr. Piti Tantakasem, CEO, mentioned “The improvement of the 9-month performance reflects our well-executed strategies and our preparation ahead of economic trend that we planned since the beginning of the year. Such initiatives include quality loan growth, prudent risk management and a preparation to tackle with interest rate hike cycle.

One of key factors that helped boost 3Q22 performance is revenue generation, especially interest income. The improvement in interest income was a result of the Bank’s preparation ahead of interest rate hike cycle. Starting since the end of last year, we have adjusted our deposit structure and increased time deposit portion as this would help reduce deposit competition and allow the Bank to manage deposit cost efficiently once entering rising rate cycle. We have also adjusted our investment portfolio to be more flexible to take opportunities from market condition and interest rate trend.

Another important factor is a combination of our loan growth strategy and prudent risk management. For interest income, there will be negative impact when loans fall to NPL as well as when NPL ratio is higher than plan. Nonetheless, as we have selectively grown loans and focus on quality rather than volume growth, our portfolio quality remains under control while NPL ratio is in line with target and lower than industry average level. As a result, interest income on loans stream could maintain its improving trend.

After the BOT’s 0.50% rate hikes, TTB has followed the direction and raised time deposit rate by 0.15% - 0.80% to increase customers’ benefits while increased lending rates by 0.20%-0.25%. The Bank intend to increase lending rate gradually to support our lending customers, especially retails customers and those who need financial supports.

For the rest of the year, we will keep our focus on funding cost optimization, quality loan growth from hire purchase and mortgage as targeted segment. And ttb consumer will help boost growth in credit card and personal loans from our existing customers. We will also stick with cost discipline and prudent risk management. This is to maintain positive momentum of operating performance.”

The details of 3Q22 and 9M22 financial performance are as follows.
As of 3Q22, total loan was at THB 1,394 billion, an increase of 1.7% from last year (YTD), driven by growths in target segments, namely, hire purchase, mortgage, personal loans and credit card. Meanwhile, deposit was at THB 1,374 billion, a 2.6% increase YTD, boosted by time-deposit acquisition. This is in line with the Bank’s deposit strategy to prepare for interest rate hike cycle.

On the revenue side, the momentum remained positive, especially interest income. In 3Q22, Net Interest Income (NII) was at THB 12,968 million, a 3.1% increase from the same period last year. This is a result of our quality-loan growth strategy, coupled with funding cost management. For Non-Interest Income (Non-NII), it was at THB 3,381 million, up 4.4% YoY. Key drivers were bancassurance fees and fees from commercial customer segment which continued to recover.

Under digital investment and TTB group’s headcount ramp-up, the Bank has focused on cost efficiency. Hence, operating cost was at THB 7,447 million or a slightly increase of 0.4% YoY and Cost-to-Income ratio was at 45%, in line with guidance.

Given revenue and cost movement mentioned above, Pre-Provision Operating Profit (PPOP) in 3Q22 was reported at THB 8,963 million, up 6.2% YoY and THB 26,533 million in total for 9-month period, a 2.7% increase from the same period last year.

The Bank continue to manage asset quality as planned and as a result, NPL ratio is under control and has declined from its peak during Covid-19 pandemic in 3Q21 at 2.98%, to 2.81% at the end of last year and down further to 2.72% in the latest quarter. And with economic recovery momentum, pressure on provision was lower than previous periods.

In 3Q22, the Bank set aside THB 4,361 million of provision which dropped by 21.1% YoY. For 9-month period, provision was THB 13,551 million, in total which decreased by 17.9% YoY. Net profit therefore was recorded at THB 3,715 million, a 57.5% increase YoY and THB 10,348 million for 9M22, an increase of 34.8% YoY, respectively.

Such a level of provision is still higher than normal-business cycle and adequate for risk cushion. This can be reflected by NPL coverage ratio which increased to 135% from 129% at the end of last year.

Lastly, capital adequacy remains high and is among the top tiers in banking industry. The preliminary CAR and Tier 1 increased to 20.0% and 16.0% as of 3Q22. The figures were well-above D-SIB’s minimum ratios required by the Bank of Thailand of 12.0% and 9.5%, respectively.