Highlights for 2006:

• Pre-tax and pre-provisioning profit increased by 21.8 percent
• Net interest margin improved from 2.87 percent in 2005 to 3.13 percent
• Gains on sale of investment rose by Baht 4.2 billion or more than five-fold 
• NPLs improved from 10.9 percent in 2005 to 9.2 percent in 2006

Bangkok Bank has reported a pre-tax and pre-provisioning profit of Baht 32.7 billion for the year, an increase of 21.8 percent from 2005. Higher corporate income tax and higher provisioning expenses meant that net profit for the year was Baht 17.9 billion, compared to Baht 20.3 billion in the previous year.

Despite higher expenses, the bank showed improvements in both net interest income and non-interest income, which contributed to better operational results.

Loan growth of 5.1 percent year-on-year was in line with expectations, increasing from Baht 912.0 billion to Baht 958.4 billion at the end of 2006. The bank also achieved reasonable progress in the resolution of non-performing loans which declined from Baht 100.6 billion at the end of 2005 to Baht 89.1 billion at the end of 2006, equivalent to about 9.2 percent of total loans.

The revised minimum loan loss reserves, based on the accelerated requirements of the Bank of Thailand, are estimated to be about Baht 56.7 billion, increasing from Baht 48.1 billion at the end of 2005. While existing reserves are sufficient to meet these new minimum requirements, it is expected that the new regulations will result in greater sensitivity in the level of reserves required against changes in asset quality. The bank has therefore set aside a higher level of provisions this year, totaling Baht 9.9 billion, which brings the total loan loss reserves to Baht 71.5 billion. The coverage ratio has thus improved from 79.1 percent to 80.2 percent of non-performing loans.

Net interest income for the year rose by 10.1 percent, or Baht 4.1 billion, to Baht 44.3 billion. As a result, net interest margins improved to 3.13 percent from 2.87 percent in 2005.

Non-interest income rose by 41.5 percent to Baht 25.0 billion, with gains on sale of investment increasing by Baht 4.2 billion, or more than five-fold, following the sale of certain equity investments. Fee and service income rose by Baht 1.0 billion, or 7.6 percent, due mainly to increases in electronic banking and credit card transactions. Foreign exchange profit also increased by 20.7 percent to Baht 3.6 billion.

Non-interest expenses increased quite significantly by Baht 5.6 billion to Baht 36.7 billion. Excluding the one-time charge of Baht 2.8 billion, relating to the decline in the value of the assets transferred to the TAMC and the gain on sale of investment of Baht 3.4 billion in 2006, the cost to income ratio fell from 53.7 percent in 2005 to 51.4 percent this year.

The loan-to-deposit ratio was relatively stable at 78.4 percent, with deposits rising year-on-year by 5.6 percent, from Baht 1,156.5 billion to Baht 1,221.7 billion at the end of 2006.

Including the profit for the second half of the year, the total capital adequacy ratio and the tier 1 capital ratio would be approximately 15.5 percent and 12.7 percent, respectively, at the end of 2006.

Shareholders’ equity increased from Baht 139.2 billion at the end of 2005 to Baht 148.3 billion at the end of 2006. Earnings per share were Baht 9.35 compared to Baht 10.64 in the previous year.

Tax returns for prior years were adjusted following clarification by the Revenue Department about the tax deductibility of provisioning expenses. Therefore the bank had a higher amount of tax deductible items in 2006 than originally anticipated, and the increase in the corporate income tax was lower than previously estimated.