Lending to SME weakened amidst an economic slowdown.
TMB Bank posted disappointing earnings results after net profits fell 13% YoY to $60.07m (THB2b) in Q2, according to UOB Kay Hian.
High-yielding SME loan growth remained weak due to the lag effect of economic recovery, said UOB analyst Thananchai Jittanoon, whilst low-yield segments like mortgage and working capital corporate loans drove measly lending gains at 1.1% QoQ.
Non-interest income also fell 7% YoY as net fee income tumbled 13% on the back of lower mutual fund fees.
“The bank’s mutual fund operation was badly hit by the weak capital market in 2Q18. In addition, the retroactive recognition of bancassurance access fees in 2Q17 also contributed partly to the lower fee income this quarter,” Jittanoon added.
Operating income also remained weak, pushing cost-to-income ratios from 45.5% in Q1 to 47% in Q2.
However, new NPL formation has been relatively stable at around 1% over the last five quarters whilst total NPL formation rate has normalised further to around 2.2% (vs peak of 3.1%) and the relapsed rate has fallen from 1.4% in Q4 to 1.2% in Q2.
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