SET-listed banks’ net profit surges 15.6% due to rate hikes

Interest income growth due to policy rate hikes has contributed to a 15.6% year-on-year increase in consolidated net profit for ten Stock Exchange of Thailand (SET) -listed commercial banks in 2023, reaching a total of 232 billion baht. The previous year’s profit was around 201 billion baht.

In the context of these rising interest rates, the banking sector demonstrated a total net interest income (NII) of approximately 727 billion baht in 2023, marking a 17.8% year-on-year increase from 617 billion baht in 2022.

The country’s top five banks, in terms of total assets, experienced an increased net interest margin (NIM) due to the positive growth in NII.

Since August 2022, the central bank has made eight policy rate increases, raising it from 0.5% to a decade-high of 2.5%. Concurrently, the banking industry has consistently set aside a higher expected credit loss (ECL) in response to economic uncertainties.

The largest lender in the country by total assets, Bangkok Bank, declared a net profit of 41.6 billion. This 42.1% year-on-year increase was a result of a 28% increase in NII due to higher yields on earning assets with the trend of rising interest rates, according to the bank’s statement to the SET. The bank’s NIM rose to 3.02%, compared to 2.42% in 2022.

Kasikornbank (KBank), the country’s second-largest bank, along with its subsidiaries, disclosed a net profit of 42.4 billion baht, a rise of 18.5% year-on-year. This was due to a low base coupled with a gradual economic recovery. Their NII amounted to 148 billion baht, an 11.6% increase in line with interest rate conditions, while NIM increased to 3.66% from the previous year’s 3.33%.

Krungthai Bank (KTB) announced a net profit of 36.6 billion baht, an 8.7% year-on-year increase, attributed to both improvements in NII and non-interest income. The bank’s NII increased to 113.42 billion baht, a 25.5% year-on-year rise, and its NIM rose to 3.22% from 2.6% in the previous year, thanks to portfolio optimisation and the rising interest rate trend.

SCB X, Siam Commercial Bank’s holding company, reported a consolidated net profit of 43.5 billion baht, a 15.9% year-on-year increase, despite higher ECL, attributed to higher NII. Their NIM rose to 3.73% from 3.29% in 2022.

Bank of Ayudhya (Krungsri) declared a net profit of 32.9 billion baht, a 7.2% year-on-year increase, partially driven by NII and net fee and service income growth contributions from the acquired overseas consumer finance businesses. Their NIM rose to 4.91% from 3.45% in 2022, reported Bangkok Post.