Ms. Kattiya Indaravijaya, Chief Executive Officer of KASIKORNBANK, said the Thai economy continued to grow in an uneven manner (K-shaped Recovery). The tourism sector has recovered while other economic activities remained pressured by rising costs, household debt burdens and living expenses, as well as a global economic slowdown.
In addition, the global financial markets faced volatility during 2023 but rebounded somewhat by year-end after markets took noticed that the US policy rate had already reached its peak. As for the 2024 outlook, though its recovery may continue, the Thai economy is likely to be challenged by global economic risks, particularly from the slowdown of the US economy due to the impacts of high interest rates and China’s economic woes prompted by fragility in its financial and property sectors. Domestic factors, including the government’s stimulus measures, should also be closely watched.
KBank and its subsidiaries reported net profit for 2023 of Baht 42,405 million, an increase of 18.55% from previous year due to the low base coupled with the economy that has begun to gradually recover in some areas. However, KBank continues to set aside expected credit loss (ECL) at a high level, almost the same as the last year, in alignment with the consistently prudent approach to bolster the Bank’s strength amid the economic uncertainties. Non-interest income increased mainly from gains on investment in financial instruments according to market conditions through investment diversification policy in global assets and revenue related to the tourism businesses from the reopening of the country. Meanwhile, net interest income increased in line with market conditions. Although loans growth slightly decreased over the previous year due to focusing on asset quality management, increasing flexibility in providing assistance to the Bank’s various groups of customers, while upgrading the Bank’s new loans underwriting process to be more efficient. Operating expenses increased in line with the increase in revenue according to higher business volume. As a result, cost to income ratio stood at 44.10%, slightly increased from the previous year, which was at 43.15%.
Operating income increased by Baht 19,396 million or 11.19%, with net interest income of Baht 148,444 million, an increase of 11.61% according to market conditions. However, net interest income has not deducted various debt management costs and operating expenses and when compared to the earning assets, net interest margin thus stood at 3.66%. In addition, non-interest income increased by Baht 3,950 million or 9.81%, mainly due to the effective management of both domestic and international investment and the increase in revenue from trading and foreign exchange transactions in line with higher business volume that was consistent with the partial recovery of the tourism sector. However, net fees and service income decreased by Baht 1,702 million or 5.17% mainly due to a decrease in brokerage fees, fees from money transfer and net premiums earned – net according to market conditions.
Expected credit loss for 2023 was Baht 51,840 million, which was setting aside at a high level, almost on par with that of last year. Expected credit loss was set aside with continuous prudent approach to bolster the Bank’s strength and cope with uncertainties from global economic situation that may occur, enhance the customers’ business operation capabilities and increase flexibility in asset quality management. As of 31 December 2023, coverage ratio stood at 152.23%.
Other operating expenses increased by Baht 10,215 million or 13.67% mainly from the operating expenses, in line with the increase in operating income according to higher business volume, such as customer service expenses, marketing expenses, and IT related expenses to support services and accommodate customer demand including maintenance of customer information security. In addition, employee expenses increased, partly from one-time cost of living subsidy measure at the beginning of the year. As a result, cost to income ratio stood at 44.10%, slightly increased from the previous year, which was at 43.15%.
As of 31 December 2023, KBank and its subsidiaries’ total assets were Baht 4,283,556 million, an increase of Baht 37,187 million or 0.88% over the end of 2022. The majority came from an increase in net interbank and money market, which was KBank’s normal liquidity management and from financial assets according to market conditions under quality management. While net loans slightly decreased from upgrading the Bank’s new loans underwriting process to be more efficient and assets quality management under the economic slowdown including supporting vulnerable groups of customers after the Bank of Thailand’s relief measures end in 2023. This is to support customers to have a better financial status, hence allowing them to operate their businesses continuously, thereby driving the country’s overall economy to recovery. In addition, the recognition of accrued interest is determined based on the amount actually expected to be received. NPL gross to total loans was 3.19%. In addition, as of 31 December 2023, KASIKORNBANK FINANCIAL CONGLOMERATE’s Capital Adequacy Ratio (CAR) according to the Basel III Accord remained strong at 19.41%, with a Tier 1 Capital ratio of 17.44%.
