News Column

TMB earnings surge after divestment of bad debts

July 16, 2014

By Somruedi Banchongduang, Bangkok Post, Thailand

July 16--TMB Bank's second-quarter earnings shot up 924% over the same period last year thanks to higher net interest revenue and a substantial decline in loan-loss provision.

The country's seventh-biggest lender by assets posted a quarterly net profit of 2.58 billion baht, up from 252 million baht a year earlier, according to a filing with the Stock Exchange of Thailand.

Net interest income for the April-June quarter rose by 7.1% year-on-year to 5.22 billion baht, while non-interest income fell by 9.6% to 2.03 billion.

TMB's net interest margin fell by 16 basis points from the same period last year to 2.83%, down four basis points from the previous quarter.

The provision for bad debts and doubtful accounts declined to 309 million baht in the second quarter compared with 1.16 billion set aside in the previous three months, due to a one-time excess reserve write-back after a 3.3-billion-baht divestment of non-performing loans (NPLs).

After the sale, the bank's bad loans fell by 10.7% from the end of March to 20.78 billion baht at the end of June. The NPL ratio decreased to 3.4% from 3.85% of total credit.

In the first half, TMB's net profit more than doubled to 4.18 billion baht from 2.07 billion in the year-earlier period.

"The bank achieved an improved performance in the second quarter by increasing revenue and controlling costs," said chief executive Boontuck Wungcharoen.

"Furthermore, we managed to expand our transactional banking deposit customers. The bank has also maintained a strong financial position. Our capital adequacy ratio under the Basel III standards is 15.4%, with a Tier 1 ratio of 10.7%, which is higher than the minimum requirements of the Bank of Thailand, set at 8.5% and 6.0% respectively."

Panadda Tanchanchiwin, TMB's head of wealth banking, said the clearer economic picture is whetting the risk appetite of wealthy customers and stoking demand for foreign investment funds.

At TMB, wealthy customers can shop for mutual fund products managed by three firms: TMB Asset Management, UOB Asset Management and CIMB Principal Asset Management.

TMB has run a wealth banking business for four years with an average growth rate of 20% a year. Opening an account requires a minimum of 5 million baht in assets.

"We will join hands with other asset management companies to sell their mutual fund products at the bank," Ms Panadda said. "We will unveil new partners and products later, and they will facilitate our wealth management business growth as well."

TMB shares closed yesterday on the SET at 2.58 baht, up four baht, in trade worth 1.83 billion baht.


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Source: Bangkok Post (Thailand)

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