Ms. Kattiya Indaravijaya, Chief Executive Officer of KASIKORNBANK, said Thai economic activity is expected to see the deepest contraction in the second quarter of 2020, due to negative impacts of lockdown measures implemented both in Thailand and other countries amid concerns over the COVID-19 pandemic. The dampened situation has severely hurt the tourism and export sectors, as well as domestic spending. Consequently, the Bank of Thailand decided to cut its policy rate to a record low of 0.50%, implemented financial and credit measures while also issuing guidelines to support customers of financial institutions.
Since 1 January 2020 the Bank and its subsidiaries initially adopted TFRS related to financial instruments (included TFRS 9) which affect to classification, measurement of financial assets and financial liabilities, impairment of financial assets and hedge accounting. The impact from first-time adoption are adjusted to retained earnings as of 1 January 2020. In addition, the financial statements are prepared in accordance with the Bank of Thailand notification which some items are not comparable with the financial statements and key financial ratios of previous period.
Operating performance for the first half of 2020, KBank and its subsidiaries reported net profit of Baht 9,550 Million, and reported net profit of Baht 2,175 Million, for the second quarter of 2020.
Operating performance for the first half of 2020 compared with the first half of 2019, KBank and its subsidiaries reported operating profit before expected credit loss and income tax expense of Baht 45,950 Million, an increase of Baht 2,805 Million or 6.50% over the same period of 2019. However, with prudent consideration on factors from uncertainties of economic contraction from the COVID-19 pandemic together with government and institution measures to support customers affected by COVID-19 that the Bank has closely monitored asset quality, KBank and its subsidiaries thus comply continuous prudent approach to set aside higher expected credit loss from the preceding period of Baht 16,937 Million or 111.97%. This resulted in a decrease of net profit for the first half of 2020 by Baht 10,423 Million or 52.18% over the preceding period, although net interest income increased by Baht 4,142 Million or 8.12% mainly from loan growth and TFRS 9 revenue recognition concept which interest income and fees income related to loan shall be calculated by using effective interest rate method. In addition, Contributions to Financial Institutions Development Fund (FIDF) decreased, resulting in NIM that stood at 3.34%. Moreover, non - interest income decreased by Baht 1,812 Million or 7.00% mainly due to fees income related to loan which change to reflect in interest income and net premiums earned – net. Other operating expenses decreased by Baht 475 Million or 1.41% mainly due to employee expenses and marketing expenses, while debt management expenses increased, resulting in the cost to income ratio that stood at 42.00%.
Operating performance for the second quarter of 2020 compared with the first quarter of 2020, KBank and its subsidiaries reported operating profit before expected credit loss and income tax expense of Baht 25,378 Million, an increase of Baht 4,806 Million or 23.37% from the preceding quarter. KBank and its subsidiaries set aside higher expected credit loss from the preceding quarter of Baht 8,320 Million or 70.08%. This resulted in net profit of Baht 2,175 Million in this quarter, a decrease of Baht 5,200 Million or 70.50% over the previous quarter because net interest income decreased by Baht 1,000 Million or 3.56% due to interest income from loans to customers and interest expenses from deposits as a result of decrease in average interest rate. NIM stood at 3.22%. However, non - interest income increased by Baht 4,121 Million or 41.33% mainly due to mark to market of investments according to market condition. In addition, under economic contraction that affected income, the Bank made an effort to control other operating expenses, resulted in a decrease in other operating expenses by Baht 1,685 Million or 9.64%. Cost to income ratio stood at 38.36% in this quarter.
As of 30 June 2020, KBank and its subsidiaries’ total assets were Baht 3,585,800 Million, an increase of Baht 291,911 Million or 8.86% over the end of 2019. The majority came from loans and interbank and money market items - net. NPL gross to total loans as of 30 June 2020 stood at 3.92%, while at the end of 2019 this stood at 3.65%. The Bank has closely monitored, provided support and assured credit quality for customer affected by COVID-19. Coverage ratio as of 30 June 2020 stood at 155.68%, while at the end of 2019 this stood at 148.60%. In addition, as of 30 June 2020, KASIKORNBANK FINANCIAL CONGLOMERATE’s Capital Adequacy Ratio (CAR) according to the Basel III Accord was 18.09%, with a Tier-1 Capital ratio of 15.38%.