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Net profit for the banking industry grew 13% in the first quarter thanks to improving business operations, despite setting higher loan-loss provisions amid global economic risks.
The 10 SET-listed commercial banks and subsidiaries reported a combined net profit in the first quarter of 2023 of 60.3 billion baht, up 13.3% year-on-year.
The gain was supported by operational profit covering better income under cost control.
The industry set aside higher expected credit losses (ECLs) and paid more attention to risk management to handle upside risks in the global economy.
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Bangkok Bank (BBL), the country's largest lender by total assets, posted the industry's highest net profit growth at 42.3% in the first quarter year-on-year.
Given that the bank continues to set aside ECLs in line with its prudent approach, the ratio of allowance for ECLs to non-performing loans (NPLs) remained strong at 265%, BBL said in a statement to the Stock Exchange of Thailand (SET).
However, Kasikornbank (KBank) reported net profit fell 4.18% in the period because of higher loan-loss provisions.
KBank and SCB X, the holding company of Siam Commercial Bank (SCB), also set aside higher reserves for a corporate client.
Shares of KBank and SCB X fell sharply on Thursday as investors were concerned that Stark Corporation (STARK) might default on loan payments to both banks.
Kattiya Indaravijaya, chief executive of KBank, said in a statement to the SET the bank continued to set aside ECLs in the first quarter, following a prudent approach to manage asset quality and cope with global economic uncertainties.
In the first quarter, one corporate customer had credit deterioration, for which ECLs had already been reserved, according to the bank.
KBank may consider setting aside additional ECLs to reflect the circumstances, which it is closely monitoring, according to the statement.
Arthid Nanthawithaya, chief executive of SCB X, said in a statement the company set aside provisions of 9.9 billion baht in the first quarter this year, up 13.5% year-on-year, to preemptively provide a cushion for risks that may arise from a specific corporate customer.
SCB X's NPL coverage ratio remained high at 164%.
Pi Securities reported KBank set aside loan-loss reserves for Stark of 80-90% of the total credit line, with the bank classifying the corpo- rate customer as a special mention loan.
At an analysts' meeting yesterday, KBank executives said the bank plans to control credit costs in a range of 175-200 basis points as part of its financial target for 2023.
However, if there are other risks the bank expects to control credit costs at no higher than 210 basis points.