TMB strengthens its leading position in mutual fund service by partnering with Eastspring. With THB12 bn gain from TMBAM deal, pre-provision operating profit for the 9 months rose 76% to THB26,360 million. The Bank also set higher provision in preparation for IFRS 9. Coverage ratio, therefore, rose to 157% and 9-month net profit was THB9,900 mn, up 54% YoY.
TMB Bank Public Company Limited (TMB) announced today its financial results for the 9 months of 2018 (9M18). The Bank’s pre-provision operating profit was reported at THB26,360 mn, up 76% from the same period last year. Apart from core operating performance which was moderately on track, the Bank recognized THB12 bn gain from a deal to sell 65% stakes of TMB Asset Management Co., Ltd. (TMBAM) for a partnership with Eastspring Investment (Singapore) and gain on change in control from subsidiary to 35% associated company. With higher PPOP, the Bank set aside additional provision from normal level in preparation for IFRS 9 and for asset quality management. Coverage ratio, as a result, increased to 157% from 143% as of Dec-17. Net profit recorded at THB9,900 mn, up 54% from the 9-month period last year.
In details of 9M18 operating performance, TMB further expanded deposit base by 4.5% year-to-date (YTD) to THB639 bn, driven mainly by a continuous growth in retail deposit through flagship products. TMB No-Fixed grew 13% YTD or THB30 bn and ME Save, digital deposit, rose 10% YTD or THB4.1 bn.
On the loan side, performing loan grew 3.3% YTD to THB646 bn, primarily boosted by retail loans, especially mortgage which increased 13% YTD or THB18 bn. The Bank has ensured mortgage portfolio quality by focusing on salary earner segment and loan size less than THB5 mn. In terms of commercial loans, large corporate loans remained resilient and grew by 4% YTD or THB9 bn. Small SME loan was slowly recovering as the Bank expanded loans selectively in order to ensure quality growth. As a result, 9M18 small SME loans stayed relatively stable from the end of year.
Net Interest Margin or NIM declined to 2.96% from 3.16% in the same period last year. Consequently, net interest income (NII) decreased 2% to THB18,263 mn. Although seeing a 4% decrease in net fee and service income, non-interest income posted a 127% growth to THB20,929 mn. This was because the Bank has recognized THB12 bn gain from an agreement to sell 65% shares of TMB Asset Management (TMBAM) to Prudential Corporation Asia for a partnership with Eastspring Investment (Singapore) and gain on change in control from subsidiary to 35% associated company.
Mr. Piti Tantakasem, CEO of TMB Bank, said “TMB is committed to offer better products and services to customers and never limit ourselves to traditional banking norm. TMB is confident that partnering with Eastspring will create positive impact to both TMB and TMBAM customers as Eastpring has global expertise in asset management in various dimensions which will uplift TMBAM’s capabilities and strengthen TMB’s Open Architecture strategy. Our customers will have more opportunities to get access to world-class products and services and more variety of leading foreign mutual funds. This will enable our customers to ‘Get MORE’.
It has been 4 years since TMB Open Architecture was launched and has offered best-in-class products from leading asset management companies to all customer groups. The platform has continued to expand with Krungthai Asset Management as the latest asset management joining the open architecture platform in October. Customers now can invest with 9 leading asset managements at TMB.
With the gain, PPOP for the 9 months rose 76% to THB26,360 million. TMB took this opportunity to prepare for IFRS 9 and to manage its asset quality prudently by increasing its provision from normal level. In 3Q18, the Bank set aside THB9,386 mn of provision and the total for 9-month period was THB14,071 mn. As a result, coverage ratio rose to 157% from 143% as of Dec-17. NPLs was at THB20,950 mn, representing an NPL ratio of 2.69%.
The Bank reported 9M18 net profit of THB9,900 mn, up 54% from THB6,429 mn from the same period last year. Capital base is also well-maintained in accordance with the Basel III framework. As of Sep-18, capital adequacy ratio (CAR) and Tier 1 ratio were at 17.7% and 13.8%, which are higher than the Bank of Thailand’s minimum requirement of CAR at 10.375% and Tier 1 at 7.875%, respectively”.