TMBThanachart reported a net profit of THB 5,355 million for the second quarter of 2024 and THB 10,689 million for the first six months. Asset quality remained under control, with a stable NPL ratio at a low level of 2.6% and a robust coverage ratio of 152%. For the second half of the year, ttb will continue to support customers, in line with the directions of household debt resolution and responsible lending.

Bangkok, 19 July 2024 - TMBThanachart Bank Public Company Limited, or TMBThanachart (ttb), announced its financial performance for the second quarter and first half of 2024 (2Q24 and 1H24). The Bank and its subsidiaries reported a net profit of THB 5,355 million for the second quarter and a total of THB 10,689 million for first six-month period. A key performance driver was efficient cost and revenue alignment. Asset quality remained under control and in line with target. Liquidity and capital positions also remained robust and stable.

Mr. Piti Tantakasem, CEO of TMBThanachart, mentioned, “The operating performance in 2Q24 and 1H24 was on track. It also reflected ttb’s ability to navigate a challenging economic environment that put pressure on revenue generation and asset quality.

In response to uneven economic recovery, ttb has focused on effective risk management and cost control. The Bank has taken proactive asset-liability management with various initiatives in managing funding cost. The initiatives include an alignment of deposit acquisition and loan growth pace, the adjustment of investment duration to mitigate impact of fluctuations and interest rate trends in the money market and the optimization of the borrowing portfolio.

Moreover, in order to effectively utilize its capital and excess liquidity, the Bank early redeemed THB 30,000 million of subordinated debt-Tier 2 in June 2024. Given the strong liquidity and capital positions, it allowed ttb to call back the bonds prior to maturity date with advantages to the Bank’s cost management.

On the operating cost side, the Bank has focused on cost discipline. Additionally, the number of digital transactions has increased, driven by digital capabilities and feature enhancements in the mobile application. This will help streamline cost-to-serve in the long run and also align with the direction to transform the role of sales staff to focus more on financial advisory. With these initiatives, the Bank could achieve its cost target, as reflected by cost-to-income ratio in 1H24, which lowered to 42% from 44% in the same period last year.

On asset quality front, the Bank has focused on quality growth. To acquire new loans, the Bank has utilized its Ecosystem initiatives, expertise, leading market position especially for the groups of home owners, car owners, and salary earners, and seamless services through digital channels. As a result, the Bank has been able to offer more suitable products and services that fit with customer needs, leading to a decent growth momentum in targeted retail segments, including +7% YTD growth for cash-your-home (CYH), +5% for cash-your-car (CYC) and +7% for personal loans.

Additionally, ttb has been proactive in managing loan portfolio and closely monitored customers to provide appropriate financial support through various loan-modification schemes. In addition, the Bank has promoted Debt Consolidation program to ease customers’ interest burden and help them sustainably improve their liquidity.

As of June 2024, the Bank’s loans under modification schemes accounted for about 11% of the total loan portfolio. Moreover, the number of customers participated in the debt consolidation program has risen from around 17,000 at the end of last year to 25,000 persons, resulting in a reduction in their interest burdens by approximately THB 1,700 million.

As a result of loan portfolio management, along with effective NPL resolution through sales and write-off activities, the asset quality remained in line with target as indicated by NPL levels. As of June 2024, NPL reduced by 2% from the end of previous year to THB 40,105 million, representing an NPL ratio of 2.6%. Meanwhile, the NPL coverage ratio stayed at a robust level of 152%.

For the rest of the year, the Bank will maintain its prudent business direction on the backdrop of uncertain economic outlook. However, with healthy financial fundamentals, ttb is in a strong position against headwinds. We will continue to provide customer supports in line with the direction of responsible lending and household debt resolution and commit to delivering quality growth and creating value to our shareholders.”

Details of 2Q24 and 1H24 key operating performance are as follows:
As of 2Q24, total loans amounted to THB 1,297 billion, reflecting a 2.4% decline from the end of 2023, in line with the prudent loan growth direction. However, targeted growth areas, particularly CYH, CYC, and personal loans, continued to growth. The decrease in outstanding loans was primarily a result of customer loan repayments and proactive asset quality management through sales and write-off activities.

Deposit stood at THB 1,365 billion or softened by 1.5% from the end of last year, as part of liquidity management plan and aligned with a slow loan demand. Despite this, the liquidity during the first six months remained high, reflected by the loan-to-deposit ratio (LDR) of 95%. This was because the Bank had expanded deposits by 4.3% in 4Q23 as a preparation for 2024 operation, providing the Bank flexibility in managing funding cost. The decline in deposit balance was due to a decrease in high-cost deposit, while retail deposit continued to grow as planned.

Regarding investment portfolios, the Bank has taken proactive steps in managing the portfolio to enhance returns in line with the interest rate trend. The Bank’s primary focus is on investing in government bonds with a strict policy against investing in or speculating on high-risk assets. Consequently, ttb has been unaffected by recent default cases in the bond market.

The abovementioned portfolio management helped cushioned interest income momentum while fee income remained challenging. In 2Q24, the Bank reported THB 17,372 million of total operating income and THB 7,210 million of operating expenses. As a result, 1H24 operating income came at THB 35,042 million, an increase of 1.2% YoY while operating expenses was at THB 14,781 million, a decrease of 2.5% YoY.

To strengthen financial position and risk cushion against economic turbulences, the Bank has raised ECL from a normal business level by setting the extra provision through Management Overlay. As a result, the ECL was reported at THB 5,281 million for 2Q24 and totaled THB 10,397 million for 1H24. After provision and tax, the Bank posted net profit for 2Q24 and 1H24 of THB 5,355 million and THB 10,689 million, respectively.

Lastly, capital position remained high and robust. As of 2Q24, Tier 1 ratio rose to 17.1%. CAR slightly declined to 19.5% due to the early redemption of subordinated debt-Tier 2. Overall, the capital figures remain one of the top tiers in the banking industry and well above the Bank of Thailand's minimum requirement for D-SIBs at 9.5% for Tier 1 and 12.0% for CAR.