TMB Bank profits up 9% to $72.44m in Q1

Net fee income, which surged 35%, buoyed quarterly earnings.

TMB Bank’s net profit rose 9% YoY in $72.44m (Bt2.28b) in Q1, according to UOB Kay Hian, as net fee income rose 35% YoY thanks to the strong performance of the mutual funds and bancassurance segment. 

Although top-line growth remained dismal, bottom-line growth was boosted by significant higher fee income growth.

“Looking forward, we expect fee income growth to normalise downward to around 10% for 2018 from a high base effect in 2017,” analyst Thananchai Jittanoon said.

Asset quality also remained in control with non-performing loan ratio steady at 2.4% of total loans. This is due to the bank’s continued loan write-off worth $53.97m (Bt1.7b) in Q1 and an improving macroeconomic outlook.

Here’s more from UOB Kay Hian: 

Against a 5% yoy loan growth (+0.4% qoq), net interest income fell 2% yoy on narrowing net interest margins (NIM). Qoq, NIM dipped 6bp (-23bp yoy) to 3.0%. This was due to the shift of loan growth from high-yield SME (- 3% qoq) to housing loans (+3.6% qoq) and business loans (+2% qoq).

Looking forward, we expect NII growth to gradually improve in upcoming quarters as housing loans rates (issued previously) gradually step up while high-yield SME loans growth should gain better traction in line with the bank’s guidance of focusing on SME lending this year.

Opex has been well managed, up 4% vs a 5% increase in total revenue. Overall, cost-to-income ratio declined to 45.5% from 46.1% in 1Q17.