BANGKOK: Thailand’s Siam Commercial Bank Pcl (SCB) said on Wednesday quarterly net profit fell 3 percent from a year earlier as it set aside loan loss provisions to increase its bad debt coverage ratio. Thailand’s third largest lender by assets posted a net profit of 12.8 billion baht ($365.51 million), higher than the average 11.9 billion baht forecast by eight analysts polled by Reuters.
The better-than-expected profit was mainly because of a special profit following the reversal of 4.3 billion baht provision for its insurance unit SCB Life which was booked in the first quarter, the bank said in a statement.
The reversal was as a result of new rules issued by the insurance regulator which allow banks to calculate the policy reserves at a discount rate and “illiquidity premium” to be added on top of the eight-quarter weighted average government bond yields for the discount rate, it said. The bank’s non interest income rose 22 percent due to the reversal of SCB Life’s provisions, which resulted in higher net insurance premiums and gain on investment, it said.
SCB’s non performing loans stood at 2.77 percent of total lending at the end of June, versus 2.64 percent at the end of March due to a lacklustre economic recovery. The bank’s loan loss provision jumped 66 percent from a year earlier to 8.5 billion baht, while its bad debt coverage ratio rose to 130 percent at the end of June from 122.8 percent at the end of March, it said. SCB, along with peers, has endured sluggish loan demand over the past two years while earnings have been dragged down by rising provisions and bad debts.
