Thailand's TMB Bank slashes NPLs, eyes profitability

TMB Bank is now focusing on return on equity and sustainable profitability.

It has reduced its non-performing loans nearly to the level of the overall banking industry.

"We were able to set extra provisions of Bt5.28 billion from selling Bt5.67 billion worth of NPLs in 2012 to make sure the coverage ratio and NPL ratio would not be problems for profitability," said CEO Boontuck Wungcharoen.

TMB reduced the NPL ratio to 4.1 per cent at the end of last year from 5.44 per cent from on September 30.

Under its rolling five-year plan, TMB managed to shave NPLs by 16 per cent in the past five years, with 5 percent coming in 2011 and 3.75 per cent in 2012. This helped raise its reserve ratio to 67 per cent and coverage ratio to 113 per cent.

The bank targets ROE surging to 14 per cent from 2.9 per cent last year.

"Financial results in 2012 showed that TMB is on the right path," Boontuck said.

TMB saw rises of 20 percent in interest income, 25 percent in fee income, 9.7 percent in deposits and 17percent in loans, which beat the lending target of 15 percent.

Its net interest margin improved to 2.7 per cent from 2.4 per cent thanks to the low cost of funds from savings products and high-yield assets such as loans to small and medium-sized enterprises.

This year should be even better because the bank has no need to set extra provisions, so its direction will change to promoting products and services to tap all customer segments, Boontuck said.

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