TMB reported net profit of THB2,111 million for 3Q19, up 10% from 2Q19. Still, TMB pursues quality growth and managing asset quality with prudence. NPL ratio was reduced to 2.52% while coverage ratio remained high at 140%.
TMB Bank Public Company Limited and its subsidiaries or TMB announced 3Q19 financial results. Mr. Piti Tantakasem, CEO, commented on the overall performance; “The operating performance has gained positive momentum every quarter. In the 3rd quarter, the Bank generated Pre-Provision Operating Profit (PPOP) of THB5,984 million, up 27% from the previous quarter (QoQ). The increase mainly came from higher Non-Interest Income, especially net fee and service income, as TMB continually introduces new products that meet the needs of customers. In this quarter, TMB launched a new bancassurance product called “TMB Wealthy 3 Gens” which helped support bancassurance fee growth. In the asset quality aspect, TMB continues to improve loan portfolio quality by reducing its weak loans. This is to prepare for IFRS9 and to strengthen the Bank’s financial position to support the merger deal. Therefore, the Bank has maintained relatively high level of provision. While NPL ratio was down to 2.52%, coverage ratio was at 140% as target. The net profit after provision and tax was reported at THB2,111 million or increased 10% QoQ”
For the details of operating performance, deposit as of 3Q19 was booked at THB673 billion, up 3.7% from the year ended 2018 (YTD). The deposit grew from both commercial and retail customer segments. TMB still focuses on growing retail deposit through the flagship products which are TMB All free, TMB No-Fixed and a digital saving “ME by TMB”. These products grew 5.1%, 2.6% and 3.0% YTD, respectively.
On the loan side, total loan was THB694 billion, up 1.1% YTD, driven mainly by retail segment especially mortgage which expanded further from the last quarter. As a result, retail loans rose 8.6% in the nine-month period with 9.2% growth in mortgage portfolio. For the commercial loans, the portfolio declined 2.2% because of the repayment of large corporates and the de-risking activities made on SME portfolio.
Net Interest Income (NII) for 3Q19 was THB6,206 million, contracting 2.2% QoQ since the Bank announced interest rate cut (both MRR and MOR) to align with BOT’s interest policy. On the other hand, Non-Interest Income (Non-NII) was recorded THB4,490 million, up 76.2%QoQ mainly from a 3.0% growth in net fee and service income to THB1,965 million. Growth in net fee and service income came mainly from bancassurance fee and a gradual recovery in mutual fund fees. The Bank also saw gain from investments. As a result, total operating income soared to THB10,696 million or up 20.3% QoQ.
The Bank has maintained operational and cost efficiency. As a result, Pre-Provision Operating Profit (PPOP) was recorded at THB5,984 million. After provision and tax expenses, TMB reported Net Profit of THB2,111 million, an increase 10% QoQ.
TMB has set aside relatively high provision in accordance with the plan to de-risk loan portfolio.The key objectives are to prepare in advance for IFRS9 and to bolster up its financial position. With the portfolio improvement activities, NPL ratio dropped to 2.52% from 2.74% in the previous quarter. Meanwhile, coverage ratio which reflects risk-absorption ability was at 140% as target.
To compare normal operating performance of 9-month of 2019 (9M19) with 9-month of 2018 (9M18), the extra gain from the sales of 65% shares in TMBAM amounting THB11.8 billion should be deducted from 9M18 results as well as the one-time expenses that occurred in this year, such as employee retirement benefit. After such adjustments, the Bank’s operating performance still improved. The 9M19 operating income rose 2.7% and net profit rose 3.4% YoY.