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TMBThanachart reported net profit of THB 4,566 million in 2Q23, a 33% increase year-over-year. For the first half of 2023, net profit was THB 8,861 million, an increase of 34% from last year. Financial position remained strong, backed by controllable asset quality with well-contained NPLs, high liquidity and robust capital levels.

Bangkok, 19 July 2023 -- TMBThanachart Bank Public Company Limited or TMBThanachart (ttb) announced its financial performance for the 2nd quarter and 6-month period of 2023 (2Q23 and 6M23). In 2Q23, net profit was reported at THB 4,566 million, an increase of 33% from the same quarter in 2022. For 6M23, net profit was at THB 8,861 million in total which improved 34% from last year. Key drivers were revenue generation, cost efficiency and lower provision as asset quality was under control with lower NPL and well-contained NPL ratio at 2.63% while NPL coverage ratio rose further to 144%.

Mr.Piti Tantakasem, CEO of TMBThanachart, mentioned “The Bank has maintained positive momentum in revenue generation and profitability. This reflects the effectiveness of our strategies and our flexibility in managing asset-liability portfolios to tackle with a rising rate environment.

Two key action plans for ttb to manage portfolios and enhance interest income generation are liquidity-recycling strategy and prefunding strategy. With the recycling strategy, the Bank has redeployed liquidity from loan repayments to grow new loans that offer better risk-adjusted returns. We believe this is a prudent approach to improve interest income rather than aggressively growing loan which could potentially lead to deterioration in portfolio quality. On the deposit side, the Bank has utilized pre-funding strategy by acquiring time deposits since last year, before entering the rate hike cycle. Consequently, the current deposit volume remained sufficient, allowing the Bank to manage deposit growth pace and funding cost more efficiently.

Recently, there has been a concern over customers’ debt serviceability in Thai banking and financial system, given the pressure from both domestic and external factors weighing down economic recovery. For ttb, we have always been conservative, emphasizing on prudent loan growth and proactively de-risking our portfolio. Moreover, we have gradually adjusted lending rates and continued to provide financial assistances, supporting our customers to be able to resume their debt repayment as normal.

With such approaches, the Bank’s portfolio quality, both commercial and retail segments, remained under control and in line with the target. At the present, NPL ratio stood at 2.63%, lower from 2.98% which was a peak level during Covid-19 period whereas NPL coverage ratio rose to 144% from 121%, indicating stronger risk buffers.

Moving forward to the second half of the year, the Bank aims to maintain quality loan growth strategy and prudent risk management and expects to see an improving momentum in operating performance, driven by our asset-liabilities optimization under the rate hike cycle, cost management and lower pressure on provision. In addition, we will continue to assist our customers, especially fragile group as well as to support the BoT’s direction to resolve Thailand’s household debt issue as ttb also aspires to improve customers’ financial well-being.”

The details of 2Q23 and 6M23 performance are as follows.

Total loans at the end of 2Q23 was THB 1,364 billion, a slight increase of 0.4% from the previous quarter (QoQ). Retail loans grew by 0.5% QoQ, seeing growth momentum from all targeted products namely ttb cash your car, ttb cash your home, personal loan and credit card. This was aligned with loan strategy to selectively grow loans from existing customers as the Bank has track record and well understands their risk profiles. Commercial loans also recorded a growth of 0.3% QoQ.

Total deposit ended at THB 1,395 billion or softened slightly by 0.5% QoQ. Such a QoQ change was in line with deposit cost optimization plan as well as liquidity management to balance loan and deposit volume. The current liquidity level remained sufficient as reflected by loan-to-deposit ratio or LDR at 98%.

When compared to 2Q22 and 6M22 performance, operating results remained on track and continued to recover. Thanks to the loan and deposit strategy together with initiatives to efficiently utilize excess liquidity and proactively manage investment portfolio to enhance asset yield during rate hike cycle, net interest income (NII) therefore improved. Meanwhile, net fees gradually recovered. As a result, total operating income in 2Q23 came in at THB 17,760 million, an 11.8% increase from 2Q22 and in total for 6-month period, total operating income was THB 34,630 million or increased by 9.4% year-over-year.

On the cost side, operating expense was THB 7,863 million in 2Q23 and THB 15,166 million in 6M23, indicating 8.3% and 6.4% increase year-over-year, respectively. Such an increase was in accordance with business volume growth as well as the Bank’s investment plan. With cost efficiency, the Bank could keep costs in control and aligned with revenue generation as reflected by cost to income ratio which stayed at 44%, in line with target guidance.

From topline improvement and cost efficiency, Pre-Provision Operating Profit (PPOP) therefore rose to THB 9,940 million or grew by 13.6% from 2Q22 and THB 19,501 million for 6M23, an increase of 11.0%.

In 2Q23, the Bank set aside provision of THB 4,244 million, which decreased by 3.2% from the previous year and in total of THB 8,520 million for the first six months, a decrease of 7.3% from previous year. Net profit, therefore, stood at THB 4,566 million, up 32.8% in 2Q23 and at THB 8,861 million in 6M23, an increase of 33.6% from the same period last year.

Lastly, on the capital adequacy, the preliminary CAR and Tier 1 remained robust at 20% and 16% at the end of 2Q23. These figures were among the top tiers in banking industry and well above the Bank of Thailand’s minimum requirement for D-SIBs banks at 12.0% and 9.5%, respectively.