Siam Commercial Bank PCL reported (reviewed) consolidated net profitof Baht 11,912 million for the first quarter of 2017, a 13.0% yoy increase from Baht 10,546 million in 1Q16, which was attributable to both higher net interest incomeand higher non-interest income.
On a quarter-on-quarter basis, net profit decreased by Baht 804 million (6.3% qoq) from Baht 12,716 million in 4Q16 mainly due to higher loan loss provisions that reverted to the normal level of Baht 5,010 million in 1Q17. The reason for low loan loss provisions of only Baht 1,994 million in 4Q16 was because the Bank already set aside additional provisions in 2Q16 and 3Q16.
Meanwhile, operating profits (before loan loss provisions) increased qoq. The Bank’s operating profits stood at Baht 19,723 million, an increaseof8.9% yoy from 1Q16 due to both higher net interest income and higher non-interest income. On a quarter-on-quarter basis, operating profits increased 11.0% mainly from higher non-interest income.
1. Net interest income
Net interest income in 1Q17 increased by 4.1% yoyto Baht 22,561million from Baht 21,670million in 1Q16 due to loan growth of 6.2% yoy and interest income from interbank and money markets rose with growing interbank and money market portfolios along with higher yieldson interbank and money markets compared to the previous year.
On a quarter-on-quarter basis, net interest income in 1Q17 fell by 1.1% qoq to Baht 22,561million from Baht 22,804 million in 4Q16, due to a decrease in loan yield, fewer calendar days, and lower interest income from investments.
2. Non-interest income
Non-interest income increased by 33.2% yoy to Baht 10,624 million in 1Q17 from Baht 7,975 million in 1Q16 due to higher net fee and service income from mutual fund fees and bancassurance fees (from the sale of third-party bancassurance products). Furthermore, net insurance claims decreased significantly following the additional policy reserves thatSCB Life set aside in 1Q16.
On a quarter-on-quarter basis,non-interest income increased by 8.4% from the previous quarter largely due to an increase in net fee and service income and net insurance premium income despite a qoq decline in net trading and FX income.
3. Non-interest expenses
Non-interest expenses increased by 16.6% yoy to Baht 13,462 million in 1Q17 from Baht 11,541 million in 1Q16 primarily driven by higher staff costs (+17.3% yoy) as well ashigher other expenses (+38.7% yoy). Staff costs rose because of both annual salary adjustments and a larger number of staff while other expenses increased due to higher marketing and promotion expenses and higher advisor service fees.
On a quarter-on-quarter basis,non-interest expenses decreased by 9.3% to Baht 13,462 million in 1Q17 from Baht 14,839million in 4Q16 primarily due to a seasonal pattern in marketing and promotional expenses
4. Loan loss provisions
The Bank set aside loan loss provisions in 1Q17 in the amount of Baht 5,010 million or 103 bps of total loans which was adequate based on prudential provisions for future uncertainty.Loan loss provisions were flat yoy but increased from a low level of Baht 1,994 million in 4Q16 because the Bank already set aside additional provisions in 2Q16 and 3Q16.The coverage ratio rose to133.4% at the end of March 2017from 122.8% at the end of March 2016.
Re-disseminated by The Asian Banker