|
|
Change Your Life! |
Major Thai bank returns to profits first time since crisis |
|
News |
April 25, 2000
BANGKOK, APR 24 (AP) - Thailand's third-largest commercial bank, Thai Farmers Bank, has shown quarterly profits for the first time since the Asian Crisis struck in 1997.
But the country's largest bank, Bangkok Bank, remains mired in red ink due to losses from problem loans.
Thai Farmers said last week it had a net profit of 301.4 million baht (dlrs 8 million) in the first quarter, versus a net loss of 7.24 billion baht (dlrs 195 million) a year earlier.
Key to the bank's return to profit was a decision to raise capital last year and set full reserves against problem loans, which at the end of March stood at 165.6 billion (dlrs 4.4 billion), or 31 percent of total outstanding loans.
After setting large loan-loss reserves last year, the bank didn't need further provisions in the first quarter, allowing its improving operating profit to shine through in the bottom line.
In the same quarter a year ago, the bank set 7.6 billion baht (dlrs 205 million) in provisions, forcing it to post huge net losses. Bangkok Bank, which moved more slowly than Thai Farmers last year to build reserves, posted a huge 22.3 billion baht (dlrs 602 million) loss versus a 9.89 billion baht (dlrs 267 million) loss a year ago.
Thailand's largest bank made provisions totaling 25.5 billion baht (dlrs 689 million), which it said was "estimated to be sufficient to meet full provisioning requirements."
The bank set full provisions in the quarter, rather than spreading losses through the year, because it fears getting left behind by Thai Farmers, which can now lend more aggressively, analysts told Dow Jones Newswires.
Bangkok Bank will need to raise capital after incurring such big losses in the first quarter, says Andrew Maule, an analyst at ABN Amro Asia Securities.
Other banks, such as Thai Farmers, have set full provisions after raising capital, while Bangkok Bank has said it plans to do a rights issue later this year.
With loan-loss reserve building out of the way, Bangkok Bank should make a net profit in the second quarter, he added.
Stripping out provisioning, Bangkok Bank said it made a 3.2 billion baht (dlrs 86 million) in operating profits in the quarter, up from 1.3 billion baht (dlrs 35 million) in the fourth quarter.
Bangkok Bank said debt restructuring helped push up interest margins as more delinquent borrowers began servicing their loans.
The bank's bad debt totaled 365 billion baht (nearly dlrs 10 billion) at the end of March, down from 393 billion baht (dlrs 11 billion) at the end of 1999.
Its problem loans are just over one third of total lending, in line with averages in the stricken Thai banking sector.
All other Thai banks posted improved operating profits in the first quarter due to debt restructuring and the fact that deposit rates have been declining faster than lending rates.
Despite the brighter figures, concerns still linger that a slowdown in Thailand's economic recovery later this year could cause new problem loans to appear.
Some analysts have criticized the banks for restructuring debt by pushing back repayment deadlines, rather than writing off loans. If the economy falters, these borrowers could easily default again.
Siam Commercial Bank, the only other bank apart from Thai Farmers to have made a profit since the crisis, has mainly rescheduled loans rather than take write-offs, they said.
|