TMBThanachart reported a net profit of THB 5.23 billion in Q3 2024
The Bank prioritizes customer support by aligning with household debt resolution and responsible lending. It has also launched the “Tang-Lak program” to assist customers affected by floods, demonstrating its commitment to helping those in need.
TMBThanachart Bank Public Company Limited, or TMBThanachart (ttb), announced its financial performance for the third quarter and the nine-month period of 2024 (3Q24 and 9M24).
Overall, the Bank and its subsidiaries’ deliverables were on track. Net profit was reported at THB 5.23 billion in 3Q24, driven mainly by efficient cost and revenue alignment together with a lower provision from the previous quarter on the backdrop of manageable asset quality. As a result, 9M24 net profit was at THB 15.91 billion.
Piti Tantakasem, CEO of TMBThanachart, mentioned that economic conditions in the third quarter remained challenging, posing pressure on both revenue generation and asset quality, unchanged from the first half of the year. As such, the Bank continued to focus on cost and revenue alignment, as well as prudently manage asset quality to control risk cost and keep the NPL ratio at a low level. In addition, the Bank launched the “Tang-Lak program”, as an immediate support to flood-affected customers, covering both SME and retail lending customers.
In terms of 3Q24 performance, the financial results remained on track, supported by efficient cost management in three main areas, which are funding cost, operating cost, and risk cost or provision expense.
For funding costs, the Bank has emphasized effective asset-liability management. Our initiatives include the optimization of loan structure, a deposit-loan volume alignment and the adjustment of investment strategy to handle market fluctuation and enhance investment returns in response to interest rate trends in the money market.
For operating costs, the Bank has consistently maintained cost discipline and ensured that spending would be aligned with our strategies to enhance customer experience. In addition, the Bank continues to improve and develop new digital capabilities for mobile banking applications to escalate digital transactions which would help improve the cost-to-serve structure. With such efforts, the Bank could manage operating costs in line with the target.
In terms of risk cost management, the Bank has prudently grown loans by leveraging our Ecosystem Play initiatives, together with our expertise and leading market positions to acquire quality loans focusing on homeowners, car owners, and salarymen. Moreover, the Bank has monitored customers closely to provide appropriate financial support through various loan modification schemes. Together with proactive NPL management, the overall asset quality situation has been manageable and hence the Bank could control risk costs as planned.
As one of its priorities, the Bank has continued to provide support to customers in line with the direction of responsible lending and household debt resolution. Our ongoing support includes the Debt Consolidation program as TTB aims to help customers improve their liquidity sustainably. Currently, the number of customers participating in the Debt Consolidation program has risen to 31,000 persons from 17,000 persons at the end of last year, which could translate into a reduction in interest burdens by approximately THB 1.90 billion.
Details of 3Q24 and 9M24 key operating performance are as follows:
As of 3Q24, total loans amounted to THB 1,253 billion, a 5.7% decline from the end of 2023 (YTD), in line with the prudent loan growth direction while targeted products continued to grow, particularly cash-your-home (+10% YTD), cash-your-car (+6% YTD) and personal loans (+9% YTD). The decrease in outstanding loans was primarily a result of loan repayments from large corporations, a slowdown in hire purchase loans due to a weak auto market and proactive asset quality management through sales and write-off activities which led to a 2% YTD decrease in NPLs.
Deposit stood at THB 1,296 billion, a 6.5% decrease YTD, in line with liquidity management to align deposit growth with slow loan demand. A key factor was mainly a decrease in high-cost deposits, while retail deposits continued to grow as planned such as ttb all free which offers transactional benefits and accident insurance. Despite such a decline, the Bank’s liquidity remained high as reflected by the loan-to-deposit ratio (LDR) of 97%. 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 costs.
In 3Q24 the Bank reported THB 17.22 billion of total operating income and THB 7.295 billion of operating expenses. As a result, 9M24 operating income came in at THB 52.266 billion, relatively stable YoY. Operating expenses were at THB 22.075 billion, a decrease of 3.8% YoY, reflecting effective cost management.
In terms of NPL management, the Bank has focused on effective NPL resolution through sales and write-off activities. With that, NPLs as of Sep-24 reduced by 2% YTD to THB 40.224 billion, representing a relatively low NPL ratio of 2.7%. Meanwhile, the NPL coverage ratio remained high at 149%, in line with the target.
As asset quality was in control, provision was at THB 4.764 billion in 3Q24 or declined by 10% QoQ. For 9M24, the provision totalled THB 15.162 billion, still higher than 9M23 as the Bank has set extra provisions for Management Overlay since the beginning of the year. This was an additional cushion to a normal business level (Normal Provision) to strengthen the buffer against economic uncertainties. After provision and tax, the Bank reported net profit for 3Q24 and 9M24 of THB 5.230 billion and THB 15.919 billion, respectively.
Lastly, the capital position remained robust. As of 3Q24, CAR was at 19.7% and the Tier 1 ratio was at 17.3%, an increase in QoQ. 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 12.0% for CAR and 9.5% for Tier 1.
Piti concluded, “For the rest of the year, the Bank will maintain its prudent business direction on the backdrop of uncertain macro-outlook. However, with healthy financial fundamentals, ttb is in a strong position to withstand with economic headwinds. We will continue to provide customer supports in line with the direction of responsible lending and household debt resolution and pursue commitment to all stakeholders.”
