20 July 2022
Bangkok (20 July 2022) --
Krungsri (Bank of Ayudhya PCL and its business units) reports 15.25 billion baht in net profit for the first half of 2022, an increase of 18.6% over-year, mainly driven by lowered expected credit loss underscoring solid asset quality as well as the Bank’s effective funding cost strategy resulting in higher net interest income.
Improved operating environment together with business and household sentiments helped boost lending as Krungsri delivered broad-based loan growth at 3.1% in 1H/22, across customer segments. The commercial lending continued to be the key growth engine with an increase in corporate and SME loans of 5.0% and 5.2%, respectively. This, coupled with proactive management of funding cost, contributed to Krungsri’s improved net interest margin (NIM) at 3.36%, in 1H/22.
Highlights of Krungsri’s consolidated first-half performance:
- Net profit: Recorded at 15,252 million baht for 1H/22, on a normalized basis, representing an increase of 18.6%, or 2,390 million baht from 1H/21, driven mainly by lowered expected credit losses, and higher net interest income.
- Incorporating an extraordinary gain on investments from the sales of shares in Ngern Tid Lor Public Company Limited (TIDLOR) in 1H/21, net profit decreased by 27.5%, or 5,796 million baht.
- Loans: Increased by 3.1%, or 58,344 million baht from the end of 2021, driven mainly by an increase in corporate and SME loans of 5.0% and 5.2%, respectively, thanks to improved business sentiment and sustained domestic demand recovery.
- Deposits: Increased by 2.2%, or 39,873 million baht, from the end of 2021, largely driven by growth in savings deposits.
- Net interest margin (NIM): Improved to 3.36% from 3.08% in 1H/21, boosted by the key drivers of strong loan growth together with the Bank’s proactive management of funding cost, especially the focused mobilization of current and savings deposits (CASA).
- Non-interest income: Decreased by 616 million baht, or 3.6%, from 1H/21, on a normalized basis, while decreasing by 11,343 million baht, or 40.8%, when incorporating the extraordinary gains on investment from the TIDLOR transaction recorded in 1H/21.
- Cost to income ratio: Improved to 42.9% from the normalized cost to income ratio at 43.4% in 1H/21, excluding the extraordinary gains from the TIDLOR transaction.
- Non-performing loan (NPL) ratio: Improved to 2.11%, compared to 2.20% at the end of 2021.
- Coverage ratio: Elevated to 189.2%, improving from 184.2% at the end of 2021, due to Krungsri’s prudential provision policy, adopting a conservative approach of loan loss reserves.
- Capital adequacy ratio (Bank only): Recorded at 17.59%, compared to 18.53% at the end of 2021.
Krungsri President and Chief Executive Officer Mr. Seiichiro Akita, said “The loan growth for the first half was broad-based encompassing all customer segments supported by improvements in both business and household sentiments. Notwithstanding the improvement in business activities during the period, the Bank continues to focus on effective cost management and productivity improvement.”
“Amidst the uncertainty and volatility of global economic and financial outlook, the Thai economy is expected to face downside risks in the second half of 2022, even though domestic economic activity and the tourism sector could benefit from the lifting of COVID-19 containment measures and international travel restrictions. With headline inflation remaining elevated, monetary normalization could result in gradual hikes of policy interest rate commencing in 3Q/22. Krungsri maintains our loan growth outlook at the upper end of the target range of 3 - 5% based on the economic growth forecast at 3.1% for the year.”
As of 30 June 2022, Krungsri, Thailand’s fifth largest bank in terms of assets, loans and deposits, and one of Thailand’s Domestic Systemically Important Banks (D-SIBs), reported 1.95 trillion baht in loans, 1.82 trillion baht in deposits, and 2.6 trillion baht in total assets. Krungsri’s capital (Bank only) was strong at 292.34 billion baht, equivalent to 17.59% of risk-weighted assets, with 12.82% in common equity tier 1 capital.