Siam Commercial Bank and its subsidiaries announced total operating income of Baht 36.0 billion in the second quarter of 2019, up 4.9% yoy, with the increase largely attributable to robust net interest income (NII) growth. Strong operating profit translated into a 19.9% qoq increase in net profit to Baht 11.0 billion in the second quarter (based on unaudited consolidated financial statements), although net profit fell slightly by 1.2% yoy. For the first half of 2019, net profit stood at Baht 20.1 billion.
NII in the second quarter rose to Baht 25.5 billion, an increase of 7.1% yoy. Strong NII growth was mainly driven by portfolio re-balancing towards high margin lending in addition to total loan growth of around 3% yoy.
Non-NII increased 0.1% yoy to Baht 10.5 billion despite a decline in SCB Life's insurance business. In addition, Non-NII increased 6.6% qoq as a result of improved recurring fee income as well as higher income from net trading & FX income and net gain on investments.
Expense growth had decelerated in the second quarter largely due to the absence of the one-off provisions to comply with the new labor law. Moreover, the transformation program is near completion and thus bringing the end to the high investment cycle. The underlying cost-to-income ratio improved significantly in this quarter to 46.2% from 51.6% in the first quarter.
Non-performing loan (NPL) ratio remained stable at 2.77% at the end of June 2019. In the second quarter of 2019, the Bank set aside Baht 5.9 billion of provisions or 110 bps in credit cost, bringing NPL coverage ratio to 153%. The Bank's capital adequacy ratio also remained strong at 17.1%.
Arthid Nanthawithaya, Chairman of Executive Committee & CEO, stated:
"Despite challenging operating environment and global economic volatility in the first half of the year, our core business remains resilient with improved expense outlook. Our strategic partnership efforts have successfully led to new business ventures and given us access to world-class capabilities to accelerate new growth engines. In addition, the Bank is currently monetizing new capabilities built through the transformation program to drive future growth and will leverage these capabilities more aggressively to create new business opportunities, organically and inorganically."