KBank posts 38 billion baht profit for 9 months, up 15.4% YoY

While the manufacturing sector faces structural issues, private spending is also under pressure due to rising costs, debt burdens, and sluggish income growth. For the remainder of 2024, challenges such as flooding, currency fluctuations, a global economic slowdown, geopolitical tensions, and weak domestic spending pose risks to Thailand’s economic outlook.

Despite these challenges, KBank is committed to its 3+1 strategic priorities to deliver sustainable value to stakeholders amid an unpredictable economic environment.

In the third quarter of 2024, KBank and its subsidiaries reported a net profit of 11.96 billion baht, down 688 million baht or 5.43% from the previous quarter, mainly due to a drop in non-interest income from the insurance business.

However, net fees and service income rose, driven by international trade and brokerage fees. Net interest income slightly decreased, reflecting the uneven economic recovery and efforts to improve the efficiency of credit processes for quality loan growth.

The net interest margin (NIM) dropped to 3.61%, largely due to short-term impacts from specific fund management transactions, though excluding these, NIM remained steady. Operating expenses totalled 21.50 billion baht, a slight decrease due to ongoing expense management efforts. KBank maintained its expected credit loss (ECL) at 11.65 billion baht, aligning with the prudent approach to mitigate uncertainties in the global economy.

For the nine-month period of 2024, KBank and its subsidiaries reported an operating profit before ECL and income tax of 85.15 billion baht, up 4.75% from the same period in 2023. This was driven by a 5.29% increase in net operating income, which outpaced a 6.02% rise in operating expenses, in line with business expansion. Although ECL decreased year-on-year, KBank continued its cautious provisioning due to economic uncertainties. As a result, net profit for the nine months was 38.10 billion baht, up 15.41% from the same period in 2023.

Net operating income reached 149.260 million baht, a 5.29% increase, mainly due to a 3.14% rise in net interest income to  113.03 billion baht, supported by market conditions.

The Bank also introduced interest rate cuts to assist customers affected by flooding. The NIM stood at 3.66%. Net fees and service income grew by 4.98% to 24.809 million baht, driven by wealth management and credit services. Non-interest income rose by 12.64% to 36,22 billion baht, thanks to gains from financial instruments, investments, and foreign exchange transactions, supported by tourism recovery.

Operating expenses increased by 6.02% to 64.10 billion baht due to employee and IT-related costs, along with marketing expenses linked to revenue growth. The cost-to-income ratio stood at 42.95%, comparable to 2023.

As of 30 September 2024, KBank and its subsidiaries reported total assets of 4.367 trillion baht, up 1.95% from the end of 2023. The increase came mainly from interbank and money market items, which rose 16.60% due to liquidity management efforts.

Net loans, however, decreased by 2.11%, reflecting the uneven economic recovery and a revamped credit process to focus on quality loans. In line with prudent asset management, the Bank plans to sell unsecured business loans and reclassify them as financial assets measured at fair value. Additionally, KBank's subsidiary plans to form a joint venture with Bangkok Commercial Asset Management (BAM) to manage non-performing assets.

Deposits grew by 2.61% to 2.77 trillion baht, resulting in a loans-to-deposits ratio of 87.85%. The gross non-performing loan (NPL) ratio stood at 3.20%, a slight increase from the previous quarter. KBank continues to closely monitor loan quality, particularly following recent floods and maintains a coverage ratio of 150.72%.

KBank Financial Conglomerate’s Capital Adequacy Ratio (CAR) under Basel III remained strong at 20.58% as of 30 September 2024.