Profits at top banks fall more than 50% in 3rd quarter

[snoop1130]

Profits at top banks fall more than 50% in 3rd quarter

By The Nation

 

 

Profits of nine banks fell by an average 55 per cent in the third quarter this year due to their high reserves to cope with the economic impact of Covid-19.

 

Excluding Krungsri (Bank of Ayudhya), the nine commercial banks' accumulated third-quarter net profit was Bt23.57 billion, down an average 55.18 per cent from Bt82.13 billion in the same period last year. The banks' net profit in the first nine months this year was Bt87.18 billion, down 34.5 per cent from Bt133.15 billion from last year.

 

Most of the drop in profit was attributed to the rise in reserves to cope with debt defaults amid the economic slowdown.

 

The five banks showing the biggest third-quarter profit drop were CIMB Thai Bank – down 77 per cent to Bt81 million; Siam Commercial Bank – down 68.9 per cent to Bt4.64 billion;

 

Bangkok Bank – down 57.4 per cent to Bt4.01 billion; Krungthai Bank – down 51.9 per cent to Bt3.05 billion; and Kasikorn Bank – down 32.8 per cent to Bt6.67 billion.

 

The banks' total reserves for the first nine months were Bt160.62 billion, up Bt61.35 billion or 61.8 per cent year on year. The three banks with the highest reserves are Tisco Financial Group, up 591 per cent; TMB Bank (129 per cent); and Krungthai Bank (87.7 per cent).

 

Meanwhile, the nine banks' held non-performing loans (NPLs) worth a total Bt474.56 billion at the end of the third quarter, up 17.6 per cent year on year. The three banks with the highest NPLs are Krungthai Bank at Bt110.66 billion, up 0.8 per cent; Bangkok Bank at Bt107.74 billion, up 25 per cent; and Kasikorn Bank at Bt96.74 billion, up 21.9 per cent.

 

Khattiya Intharawichai, Kasikorn Bank's chief executive officer, said its net profit dropped due to a 70.24 per cent rise in reserves to Bt17.69 billion for expected credit loss during the virus crisis.

 

Arthid Nanthawithaya, Siam Commercial Bank's CEO, said SCB had assessed the quality of its loan portfolio carefully and was monitoring loan quality deterioration amid the Covid-19 fallout. The bank’s NPLs rose to 3.32 per cent from 3.05 per cent in June.

 

Kasikorn Research Centre's Kanchana Chokpaisansilp predicts banks will face more challenges in the fourth quarter this year because exports and tourism are yet to recover.

 

"We expect the banks' fourth-quarter expenses to rise more than the previous quarter from setting up of reserves to cope with future risks, which will see net profits stay in negative territory," she said.

 

"Meanwhile, banks' NPLs this year would rise more than our previous forecast of 3.5 per cent due to increasing risks," she added.

 

Source: nationthailand.com/news/30396617

 

-- © Copyright The Nation Thailand 2020-10-22

 

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[BritManToo]

1 hour ago, snoop1130 said:

The banks' total reserves for the first nine months were Bt160.62 billion,

Meanwhile, the nine banks' held non-performing loans (NPLs) worth a total Bt474.56 billion

Oh dear, bad loans are 3x the banks reserves ........ that can't be good.

Edited October 22, 2020 by BritManToo

[RichardColeman]

1 hour ago, snoop1130 said:

The five banks showing the biggest third-quarter profit drop were CIMB Thai Bank – down 77 per cent to Bt81 million

If the CIMB bank is now turning over just a £2 million profit, I would suggest its either about to go bust or about to completely rethink its strategy, close a large quantity of its high street banks and start hiring those street sharks to get the bad loans back, for when they start to hit more in the coming months they will be runnign at a loss

[Matzzon]

Just wondering what they are going  hit the customers with regarding more fees to fix this little problem.

[BritManToo]

1 hour ago, RichardColeman said:

If the CIMB bank is now turning over just a £2 million profit, I would suggest its either about to go bust or about to completely rethink its strategy, close a large quantity of its high street banks and start hiring those street sharks to get the bad loans back, for when they start to hit more in the coming months they will be runnign at a loss

I seem to remember a story from last week saying CIMB is closing all it's ATMs.

Probably to cut costs, and maybe to limit withdrawals if a run starts.

I'd be moving my money out, if I were a customer.

Edited October 22, 2020 by BritManToo

[Banana7]

There was no mention of "special mention loans" which were 1.2 trillion baht at the end of Q2 2020 as reported by the Bank of Thailand on 20 August. These are loans yet to be classified as NPL, but are not up to date on their payments.

 

If all of these SMLs become NPLs, banks need to substantially increase their reserves, or maybe start limiting withdrawals or reduce operating expenses.

 

If they want to increase reserves, they will most likely issue bonds. Kasikorn, SCB and the Bank of Thailand all issued bonds, denominated in USD, in 2020, over USD$2 Billion in total, this year already.

 

 

FI_SM_001.xlsx

Edited October 22, 2020 by Banana7

[ourmanflint]

It's not going to take much more to topple this house of cards

[klauskunkel]

Profits down 50%?

100% - 50% = %50

That leaves another 50% of profits,... right?

[Cake Monster]

15 hours ago, snoop1130 said:

Arthid Nanthawithaya, Siam Commercial Bank's CEO, said SCB had assessed the quality of its loan portfolio carefully and was monitoring loan quality deterioration amid the Covid-19 fallout. The bank’s NPLs rose to 3.32 per cent from 3.05 per cent in June.

" Loan quality Deterioration " is another worrying aspect of this report.

If the Banks have Loaned Money out against Assets that are becoming less valuable IE Cars , White Goods Etc, this will cause the Banks to have a negative Asset to Loan Ratio  on their Books.

Many previously " good Assets " will also soon become less Valuable IE Houses, Etc, and if the Loans on these good Asset were given against poor evaluations of the original Asset, the Banks are really in the Doo-Doo.

If that were the case, the Banks would find it hard to borrow Money in order to prop the Sector up at competitive rates ( if at all ) because of poor Management.

 

[Enzian]

This article starts out "Excluding Krungsri..." bank. Why? Is that a good sign or a bad sign for Krungsri? It's important to me because Krungsri holds my Foreign Currency Deposit account with enough to renew my Non-O visa next month, for another year. And FCD accounts do not have deposit insurance. I'm assuming they are in good shape, partly because Japanese consortiums own about 2/3 of the bank. The Financial Summary posted on their website doesn't look too bad though of course it is not easy to interpret fully, but does anyone have any info or links?

[xylophone]

16 hours ago, BritManToo said:

Oh dear, bad loans are 3x the banks reserves ........ that can't be good.

You are right, it is not a good look at all, however there is something which will possibly lighten the gloom on this.

 

A great proportion of the "bad loans" will be in property and although the figures look alarming, the assets that they cover can be sold thereby bringing some revenue back to the bank, so not a total loss.

 

However I do believe that the years of poor lending decisions/mates rates/lack of oversight will come back to bite some of these banks, and quite badly so.

 

I did see an article a short while ago which stated that Krungsri was the strongest of the banks in Thailand across a few measures, so I wonder if that bank will see an influx of deposits?

[hotchilli]

17 hours ago, snoop1130 said:

Profits at top banks fall more than 50% in 3rd quarter

A picture will say it all

[Burma Bill]

18 hours ago, snoop1130 said:

Profits of nine banks fell

 

 

[sammieuk1]

But the teflon baht rumbles on and on unscathed with any calamities  ????  

[Oldie]

5 minutes ago, sammieuk1 said:

But the teflon baht rumbles on and on unscathed with any calamities  ????  

Look at the Euro for instance. Countries with huge amounts of debt plus negative interest rates and endless money printing. A wonder that the Baht is not higher... 

[Mavideol]

19 hours ago, snoop1130 said:

The five banks showing the biggest third-quarter profit drop were CIMB Thai Bank – down 77 per cent to Bt81 million; Siam Commercial Bank – down 68.9 per cent to Bt4.64 billion;

 

Bangkok Bank – down 57.4 per cent to Bt4.01 billion; Krungthai Bank – down 51.9 per cent to Bt3.05 billion; and Kasikorn Bank – down 32.8 per cent to Bt6.67 billion.

however they all still show profits, will not feel sorry for any of them.... but do feel for the small business with NO profit at all

[Leaver]

On 10/23/2020 at 11:35 AM, xylophone said:

A great proportion of the "bad loans" will be in property and although the figures look alarming, the assets that they cover can be sold thereby bringing some revenue back to the bank, so not a total loss.

Sold to who, and when?

[xylophone]

1 hour ago, Leaver said:

Sold to who, and when?

Sold at a discount to buyers who look for and buy distressed assets.

[Leaver]

5 minutes ago, xylophone said:

Sold at a discount to buyers who look for and buy distressed assets.

Would have to be a big discount, and there are no tenants around.  

[jabis]

3 hours ago, Leaver said:

Would have to be a big discount, and there are no tenants around.  

Was it just yesterday an asset house buying 12Bn non-performing assets with face value of 40Bn - some people make money out of other peoples' distress always.

[ExpatOilWorker]

On 10/23/2020 at 11:35 AM, xylophone said:

You are right, it is not a good look at all, however there is something which will possibly lighten the gloom on this.

 

A great proportion of the "bad loans" will be in property and although the figures look alarming, the assets that they cover can be sold thereby bringing some revenue back to the bank, so not a total loss.

 

However I do believe that the years of poor lending decisions/mates rates/lack of oversight will come back to bite some of these banks, and quite badly so.

 

I did see an article a short while ago which stated that Krungsri was the strongest of the banks in Thailand across a few measures, so I wonder if that bank will see an influx of deposits?

 

Real-estate or housing is only 20% of the NPL banks hold and most of it is not very attractive.

The right column is showing % of loans going sour and it appears construction and retail are hurting the most with 6-7% NPL.

 

 

 

[xylophone]

3 hours ago, ExpatOilWorker said:

 

Real-estate or housing is only 20% of the NPL banks hold and most of it is not very attractive.

The right column is showing % of loans going sour and it appears construction and retail are hurting the most with 6-7% NPL.

 

 

 

Thanks for the info, and I was really considering not just real estate per se, but construction lumped into it in my post as a broad generalisation.

 

The distressed assets in the construction industry could include land and equipment et cetera, but anyhow the whole situation doesn't look to brilliant, and it's quite possible that a lot of the lending done in the construction side of the business was done because of the status of the borrower and construction company rather than them being on a sound financial footing?

 

On a related subject, there is a huge construction site that spans the ground between the road leading to Tesco Lotus in Phuket, and the road leading to Central, and some sort of leisure park is under construction and every time I drive by it there is a little activity, which has slowed down quite markedly, and I often wonder if that will become a casualty of this virus, due to lack of tourists.

 

The "personal consumption" line looks a little worrying and it's been said for a long time that Thais are clocking up personal debt at quite a rate, but I wonder exactly what that line covers as the credit card debt is not particularly high?

 

Overall, not a pretty sight and one has to wonder if a banking crash similar to 1997, could be on the cards??
 

[spidermike007]

Most of the drop in profit was attributed to the rise in reserves to cope with debt defaults amid the economic slowdown.

 

Utter drivel. Sure, that is a factor. But, how about a lack of deposits, due to an extreme economic slowdown? How about a drop in interest earnings, due to a slowdown in credit card usage? How about a dramatic drop in applications for mortgages, car loans, and other similar areas? How about a drop in new home construction loans, and loans to developers? How about a dramatic drop in profit from foreign exchange? This article does not even begin to cover the extent of the crisis. 

[Henryford]

I bet half the pick ups in Isaan will soon be repossessed.

[LomSak27]

Again the dreaded                      NON PERFORMING LOANS           ????

[Enzian]

1 hour ago, Henryford said:

I bet half the pick ups in Isaan will soon be repossessed.

And my live-in girlfriend's pick-up would possibly be one of them if I weren't making the monthly payments for her. That's her biggest expense for me if we don't count food and some misc.

[ExpatOilWorker]

2 hours ago, xylophone said:

Thanks for the info, and I was really considering not just real estate per se, but construction lumped into it in my post as a broad generalisation.

 

The distressed assets in the construction industry could include land and equipment et cetera, but anyhow the whole situation doesn't look to brilliant, and it's quite possible that a lot of the lending done in the construction side of the business was done because of the status of the borrower and construction company rather than them being on a sound financial footing?

 

On a related subject, there is a huge construction site that spans the ground between the road leading to Tesco Lotus in Phuket, and the road leading to Central, and some sort of leisure park is under construction and every time I drive by it there is a little activity, which has slowed down quite markedly, and I often wonder if that will become a casualty of this virus, due to lack of tourists.

 

The "personal consumption" line looks a little worrying and it's been said for a long time that Thais are clocking up personal debt at quite a rate, but I wonder exactly what that line covers as the credit card debt is not particularly high?

 

Overall, not a pretty sight and one has to wonder if a banking crash similar to 1997, could be on the cards??
 

 

Personal Consumption is the sum of Housing, Auto, Credit cards and other personal loans. Line 10 is only a subtotal.

[xylophone]

12 minutes ago, ExpatOilWorker said:

 

Personal Consumption is the sum of Housing, Auto, Credit cards and other personal loans. Line 10 is only a subtotal.

Hmmm....if so it is a poorly constructed spreadsheet!!

[Leaver]

14 hours ago, jabis said:

Was it just yesterday an asset house buying 12Bn non-performing assets with face value of 40Bn - some people make money out of other peoples' distress always.

Is the "face value" not 12Bn now?  

 

Sure, some will buy up distressed assets, but if property, I don't expect these assets to increase very much for some years to come, unless the property is used for business purposes, primarily around tourism.   

[jabis]

1 hour ago, Leaver said:

Is the "face value" not 12Bn now?  

 

Sure, some will buy up distressed assets, but if property, I don't expect these assets to increase very much for some years to come, unless the property is used for business purposes, primarily around tourism.   

I think it is suggested the loans still sit at 40Bn but the banks, or whom ever last creditor was, sold the loans for liquidity of 12Bn, so the new creditor will still try to get 40Bn worth of dosh from the asset debtors, and as they are non-performing and debtor cannot re-finance/negotiate, the new creditor will initiate the reposession of the assets - at least that's how I read the article. For the original creditor, the debts were now only 12Bn "face value" (sidenote; the term was from the article, not my own wording ???? ) worth, and wanted to not handle the repo-procedures or renegotiate those debts any further, so chose to dump those NPL's from their balance sheet at the perceived loss of 28Bn. Now on the other hand now that they don't carry 40Bn of NPL's, can go back to issuing even more loans, as they're performing better than ever, lol.