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RETAIL BANKING | Cesar Tordesillas, Thailand

TMB Bank's net profit up 6% YoY

TMB Bank posted a 2Q12 profit of Bt1.26 billion, up by 6% YoY and 22% QoQ.

Pre-provision operating profit was Bt2.4 billion, up by 30% YoY and 6% QoQ. 1H12 earnings represent 48% of our old FY12 forecast of Bt4.8 billion.

Loans totaled Bt421bn at end-June 2012, up by 5.1% QoQ and up 6.0% YoY, led by the SME portfolio. Because ofrobust loan growth and good funding cost management, 2Q12 NIM rose by 12 bps QoQ to 2.51%. TMB's net interest income grew only 3% QoQ to Bt4.1 billion.

The bank set loan loss provisions of Bt932m for 2Q12, up 74% YoY (but down 25% QoQ). Thus, its loan loss

coverage ratio increased to 79% at end-June from 74% at end-March. Fee income expanded by 12% YoY and 10% QoQ to Bt1.51 bn, whereas OPEX was Bt3.25 billion, up by 1% QoQ and 3% YoY. Thus, TMB's cost/income ratio dipped to 57.3illio% in 2Q12 from 58.3% the previous quarter. Its NPLs/loans ratio declined slightly to 5.58% at end-June from 5.84% at end-March.

Because of our expanded expectations for lending growth, the bank has upgraded its FY12-13 earnings forecasts by 4.2% and 6.8%, respectively, to Bt5bn and Bt6.3bn.

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