In 2019, the Thai economy is forecast to expand more slowly than in 2018. Slowing global growth, uncertainty over international trade policies and the persistently strong baht have weighed on both exports and tourism. However, the Thai economy is underpinned by the continued expansion in private consumption. In addition, following the successful formation of the new cabinet, the outlook for private investment should brighten in line with rising business confidence supported by government policy continuity, especially with regard to ongoing infrastructure investment and greater clarity on the Eastern Economic Corridor (EEC).
For the second quarter of 2019, Bangkok Bank and its subsidiaries reported a net profit attributable to owners of the Bank of 9,347 million baht, an increase of 1.7 percent from the second quarter of 2018. Net interest income increased by 0.4 percent and the net interest margin improved slightly to 2.36 percent. Non-interest income decreased by 1.0 percent as a result of lower gains on tradings and foreign exchange transactions and a minimal decline in net fees and service income. The decline in net fees and service income was caused by lower fees from securities business in line with the capital market situation, while fees from bancassurance and mutual funds increased. Consequently, the ratios of net interest income and non-interest income to operating income continued to stand at about 57 percent and 43 percent, respectively, and were at similar levels to the same period last year, as a result of the Bank’s intention to diversify its source of income. The ratio of expense to operating income stood at 45.3 percent.
At the end of June 2019, the Bank’s loans amounted to 2,017,314 million baht, a slight decrease from the previous quarter, owing to a decline in loans to businesses and loans made through the Bank’s international network. The ratio of non-performing loan (NPL) to total loans was 3.5 percent, the same level as the previous quarter. The Bank continued to focus on prudent control over credit underwriting and to ensure loan quality and the allowance for doubtful accounts to maintain at the appropriate level. The ratio of loan loss reserves to NPL was 185.8 percent.
The Bank continues to maintain liquidity and capital at a sufficient level to support future business expansion, at the end of June 2019, total deposits amounting to 2,352,679 million baht, an increase of 0.5 percent. Meanwhile the loan to deposit ratio stood at 85.7 percent. In terms of capital, with the inclusion of net profit for the six months ending June 30, 2019, the total capital adequacy ratio, the Common Equity Tier 1 capital adequacy ratio and the Tier 1 capital adequacy ratio of the Bank and its subsidiaries were approximately 19.1 percent, 17.6 percent and 17.6 percent, respectively. These capital adequacy ratios are above the Bank of Thailand’s minimum capital requirements.