TMBThanachart reported a net profit of THB 4,295 million in 1Q23, an increase of 34% from the same period last year. Asset quality remained under control. NPL ratio stayed at 2.69%, a relatively low level while NPL coverage ratio, a risk cushion, rose further to 140%. With such a strong financial position, the Bank is well-positioned for pursuing business aspirations and supporting customers during the rate hike cycle.

Bangkok, 19 April 2023 - TMBThanachart Bank Public Company Limited or TMBThanachart announced its financial performance for the 1st quarter of 2023. Net profit was reported at THB 4,295 million, an increase of 12% from the previous quarter and 34% from the 1st quarter of 2022. For Non-Performing Loans or NPLs, the NPL ratio stayed at a relatively low level at 2.69% while the NPL Coverage ratio rose further to 140%. The financial results reflected an operational improvement in all aspects, namely, revenue generation, operating cost management, and asset quality.

Mr. Piti Tantakasem mentioned “The operating performance in the 1st quarter of 2023 was on track and reflected a result of TMBThanachart’s business direction to generate quality growth and to leverage post-merger strengths to uplift the Bank’s competitiveness and profitability. Maintaining a strong financial position is also one of the key focuses, intending to strengthen the Bank’s stability and resiliency against any economic circumstances.

To oversee the financial position, the Bank has managed the balance sheet by ensuring the quality of all balance sheet components - assets, liabilities, and equity. For the loan portfolio, for instance, we have focused on a prudent growth strategy by selectively growing quality loans to avoid taking excessive risks during the fragile global economy. For the investment portfolio, the Bank’s policy is to invest in low-risk and highly liquid financial instruments. Our investment objective is mainly for liquidity management, not for taking positions in risky instruments or digital assets for speculation purposes. In terms of deposits, our direction is to expand retail deposit base to reduce concentration risk from large depositors. In addition, for the equity side, we focus on efficient capital management and the adequacy of capital maintenance for the future business growth.

As a result of the balance sheet management, TMBThanachart could continue to deliver improving financial performance and could maintain the positive momentum of net profit for six consecutive quarters. The Bank also saw improvement in all dimensions. For example, the capital adequacy ratio (CAR) has increased from 18%, a pre-merger level, to 20% at present. The NPL coverage ratio or a risk buffer has risen from 120% to 140%. The LCR, one of the liquidity indicators, has been maintained at a high level at around 180%, well-above minimum requirement of 100%. Such improvements indicate that after the merger, TMBThanachart has established a stronger financial position as well as maintained adequate levels of liquidity and capital. Overall, the Bank is in good shape to achieve a business plan.

In 2023, we set target to expand loan growth more towards the retail segment by leveraging our leading position in hire purchase and home loan markets to extend more product offerings, led by ttb Cash Your Car, ttb Cash Your Home, ttb Payday loan, and car insurance. Our target customers are mainly from larger customer base post-merger. The focus on the existing customers would give advantages in terms of risk management and customers’ experience as we know and understand customers’ profiles well. In the following quarters, we also plan to introduce more financial solutions under the ecosystem play concept for salary earners, homeowners, and car owners.”

Details of 1Q23 key operating performance is as follows.
In 1Q23, the Bank could grow new loans in targeted areas as planned, led by Cash Your Car and Cash Your Home loan products. However, as loan repayment from large corporate customers offsetting new loan book, total loan outstanding ended at THB 1,358 billion or decreased by 1.3% from the end of last year (YTD). Meanwhile, deposit was recorded at THB 1,402 billion, an increase of 0.2% YTD. Key growth driver was time deposit, in line with deposit cost management plan during the rate hike cycle.

After the BoT resumed FIDF contribution to a pre-Covid-19 level which puts pressure on deposit costs, the Bank used a liquidity-recycling strategy to sustain interest income stream and maintain yield generating capability. With such a strategy, the Bank redeployed liquidity from loan repayments as a funding source to grow new loan which offers better risk-adjusted returns. Moreover, as the Bank has built deposit base before the rate hike cycle, there is still room to grow new loans regardless of aggressive deposit growth. This can be reflected by the loan-to-deposit ratio (LDR) which stayed at 97% at the end of 1Q23.

Apart from such loan and deposit strategies, the Bank also proactively manage excess liquidity and investment to improve asset yields from the rising interest rate trend. As a result, Net Interest Income (NII) continued to recover, despite a slowdown in loan growth. Net fees and service income also improved when compared to the same period last year (YoY). Therefore, total operating income rose from 1Q22 by 6.9% to THB 16,870 million.

Operating expense was THB 7,303 million, an increase of 4.5% YoY. Such an increase was in line with business volume growth and the Bank’s investment plan. As the Bank could efficiently manage expenses to be aligned with revenue generation, the cost to income ratio stayed at 43%, compared to 44% in 1Q22. Pre-provision operating profit, therefore, was reported at THB 9,561 million, an increase of 8.4% YoY.

In 1Q23, provision expense was at THB 4,276 million, a decline by 11.1% YoY. After provision and taxes, net profit was reported at THB 4,295 million, an increase of 34.4% YoY.

In terms of lower provision trend, it was a result of the Bank's well-on-track asset quality management as reflected by the NPL ratio which dropped to 2.69% from 2.73% at the end of last year. Risk buffer, on the other hand, remained strong as shown by the NPL coverage ratio which rose from 132% in 1Q22 to 138% at the end of last year, and stood at 140% at the end of 1Q23.

Lastly, on the capital adequacy, the preliminary CAR and Tier 1 stayed at 19.9%% and 16.2% as of 1Q23. The figures were among the top tiers in the industry and well above the Bank of Thailand’s minimum threshold for D-SIBs banks of 12.0% and 9.5%, respectively.

Mr. Piti Tantakasem concluded “Besides pursuing business growth, we will continue to provide support to our customers as the Thai Economy has entered an interest rate hike cycle. For interest rate adjustment, the Bank intends to raise deposit rates to increase customers’ saving benefits while gradually adjusting lending rates to help ease customers’ burden and support their long-term liquidity management, especially for vulnerable customers in both retail and commercial segment.”