TMB Bank opts to maintain prudent provisions this year
EVEN though high loan-loss provisions last year dampened TMB Bank’s net profit, Boontuck Wungcharorn, chief executive officer, said the bank this year would maintain prudent provisions for a coverage ratio of 140-150 per cent.
TMB Analytics, the research unit of the bank, predicts that gross domestic product this year could grow by 3.5 per cent, up from 2.7 per cent last year. Non-performing loans (NPLs) will be on an upward trend until the end of this year, so prudent provisions are a safeguard for the bank. Also, it wants to maintain the coverage ratio in the range of 140-150 per cent.
Last year, TMB had a coverage ratio of 142 per cent as it set aside provisions of Bt5.48 billion, up by 59 per cent from 2014. The significant provisions pulled down the bank’s net profit by 2 per cent to Bt9.33 billion. The bank will try to keep its NPLs this year below 3 per cent after they climbed last year to 2.99 per cent from 2.85 per cent at the end of 2014.
“Where we were able to do well last year was in the cost-to-income ratio, which dropped to 49 per cent from 53 per cent in 2014, as total income grew by three times expenses, from the target of two times. The bank will try to maintain the growth of both income and lending,” Boontuck said.
Last year, TMB’s total income increased by 12 per cent to Bt33.45 billion, with non-net interest income from retail and business customers the key driver.
Based on the GDP growth target of 3.5 per cent this year, expansion of both loans and deposits is expected to be in the range of 8-10 per cent, while non-net interest income is projected to grow by 25-30 per cent.
TMB’s three banking sectors unveiled their strategies and business plans for this year, which will embrace digitisation to improve the experience of customers, which will strengthen its businesses.
The bank will upgrade to a new version of Business click and launch its mobile application for SME (small and medium-sized enterprise) customers. For retail customers, it will next month launch the “ME by TMB” mobile app, for self-service deposit banking, and add mutual funds and bancassurance to its mobile banking.
Last year, the bank welcomed 292,846 new digital-banking users, up from 34,954 in 2014.
TMB employs digital banking as a tool for offering financial services to customers. It believes digital banking has a lot of room to grow because only 19 per cent of Thai bank customers use it, compared with 36 per cent in Indonesia and 44 per cent in Vietnam.
In developed countries in Asia, the penetration rate is 90 per cent, Boontuck said, referring to data from the 2014 McKinsey Asia Personal Financial Service Survey.
