NIM was also flat.
According to Maybank Kim Eng, Siam Commercial Bank's loan growth was flat QoQ (+9%YoY) in 1Q14. NIM was also flat QoQ although the bank has cut interest rate in 1Q14.
Note that the earnings asset yield has dropped at the same magnitude of funding cost as the bank has reduced the deposit by 2% QoQ and raised the proportion of low cost deposit (CASA) to 54% from 49% in 4Q13. Non-interest income dropped by 7% YoY due to the absence of dividend income from Vayupak fund. Net insurance premium grew by 20% YoY due to the strong insurance demand.
Effective cost control in 1Q14. OPEX was flat YoY (-14%QoQ) due to a drop in marketing expenses. As a result, cost to income ratio fell significantly to 35.7% from 36.6% in 1Q13 and 40% in 4Q13.
Stable asset quality. NPLs ratio was stable at 2.32% vs 2.30% in 4Q13. Note that the bank has sold THB3.3bn NPLS in 1Q14.The bank set aside credit cost of 0.72% against 0.64% in 1Q13.
What’s Our View
We maintain our earnings forecast although its 1Q14 earnings are above our estimates as we expect the weak non-interest income growth due to the high base of fee income from capital market and discontinuation of income from Vayupak fund. We are cautious on it asset quality following the slow economic cycle and the recentincrease proportion in higher yielding loans.
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