Ms. Kattiya Indaravijaya, Chief Executive Officer of Kasikornbank stated that the Thai economy in the first quarter of 2023 still faces limitations in recovery, despite support from the gradual rebound of the tourism sector. Overall, exports continue to decline compared to the same period last year due to the impact of the global economic slowdown, while private sector spending remains limited in growth.

For the remainder of 2023, it is essential to monitor the uncertainties of the global economy, including the effects of the recent rapid increases in policy interest rates, particularly in the United States, which may heighten the risk of an economic recession. This situation will undoubtedly impact and increase pressure on Thailand's export sector, potentially leading to a contraction in overall exports for the year.

Moreover, the impact on domestic spending from cost pressures, the cost of living, and household debt issues continues to be a factor that increases vulnerability to the recovery trend of the Thai economy. The bank and its subsidiaries will continue to operate with a cautious approach under the uncertain economic conditions, while also providing ongoing support to customers affected by the uneven economic recovery through various banking channels.

Performance for Q1 2023 Compared to Q1 2022

  • In Q1 2023, the bank and its subsidiaries reported a net profit of 10.741 billion baht, a decrease of 4.19% from the same quarter last year.
  • Operating profit before expected credit losses and income tax was 26.781 billion baht, an increase of 15.32% from the same period last year, driven by strong growth in operating income and consistent effective cost management.

The bank continues to set aside provisions for expected credit losses (ECL) as a precautionary measure even though it has decreased from Q4 2022. However, compared to the same quarter last year, the amount has increased due to the bank's proactive management of asset quality to accommodate fluctuations in the global economy and unfavorable conditions affecting domestic economic recovery, which may impact certain vulnerable customer groups. Additionally, in Q1 2023, the bank identified one major customer showing signs of deteriorating credit quality, for which provisions have already been made. Nevertheless, the bank may consider the appropriateness of additional provisions in line with potential future scenarios.

Net interest income increased by 9.84% in line with the rising interest rate environment and growth in new loans according to the bank's strategy. The net interest margin (NIM) stood at 3.46%, despite increased financial costs from the normal adjustment of the fund contribution rate to 0.46%. Non-interest income rose by 32.00%, primarily from the fair value of financial instruments measured at fair value through profit or loss, reflecting market conditions. Other operating expenses increased by 13.82%, consistent with the rise in income due to business volume, along with increased employee-related expenses, partly due to one-time cost of living assistance measures, resulting in a cost-to-income ratio of 42.50%, close to the same period last year.

Performance for Q1 2023 Compared to Q4 2022

  • Compared to Q4 2022, the bank and its subsidiaries reported a net profit of 10.741 billion baht, an increase of 7.550 billion baht, primarily due to a reduction in expected credit loss provisions, which were set at a high level in Q4 2022 as a precautionary measure in response to uncertain economic conditions.
  • Operating profit before expected credit losses and income tax was 26.781 billion baht, a decrease from the previous quarter mainly due to a decline in operating income. Other operating expenses decreased mainly from seasonal marketing expenses, while employee-related expenses increased, partly due to one-time cost of living assistance measures. The cost-to-income ratio was 42.50%, similar to Q4 2022, which was at 42.60%.
  • As of March 31, 2023, the bank and its subsidiaries had total assets of 4,238,084 million baht, a decrease of 8,285 million baht or 0.20% from the end of 2022, primarily due to a reduction in net loans, partly from the management of non-performing assets, such as debt restructuring, debt sales, and write-offs. However, new loans continued to grow.
  • In the bank's strategic customer segment, the ratio of non-performing loans (NPL) to total loans (%NPL gross) stood at 3.04%, and the coverage ratio for expected credit losses to non-performing loans was 156.68%, up from 154.26% at the end of the year. The total capital ratio to risk-weighted assets of Kasikornbank's financial group under Basel III guidelines as of March 31, 2023, remained strong at 18.90%, with a Tier 1 capital ratio of 16.92%.