Bank of Ayudhya reports 4.89 bn in net profit for 2008
Bank of Ayudhya Public Company Limited announced a significant improvement in its performance for the year 2008.
Bangkok, Bank of Ayudhya Public Company Limited announced a significant improvement in its performance for the year 2008. The Bank and its subsidiaries recorded an operating profit before provisioning for doubtful accounts and taxes of Baht 11.51 billion, a 35% increase as compared to 2007. After setting aside Baht 6.06 billion in provisions and Baht 0.56 billion for taxes, the Bank recorded a net profit of Baht 4.89 billion, a significant improvement when compared to a net loss of Baht 3.99 billion booked in the prior year as a result of IAS 39 provisioning.
Major contributors to the favorable 2008 performance when compared to the prior year are: a 36% increase in net interest income and a 34% increase in fee from service income while non-interest expenses only grew by 14%. And after setting aside an additional 80% or Baht 2.29 billion provision for its held-to-maturity CDO investments, the bank still achieved a year on year significantly improved operating profit.
Major drivers for the improved profitability in 2008 are: a net loan growth of Baht 107 billion, or 24%, from both organic and inorganic growth and a significant shift in the composition of the Bank’s loan portfolio with the retail lending proportion increasing from 22% at the end of 2007 to 32% at end of 2008. In addition, the Bank achieved its target in asset quality improvement through the successful sales of Non performing loan. In 2008, the bank and its subsidiaries reported a Baht 15.1 billion reduction in NPL bringing the outstanding NPL to Baht 55.60 billion or 8.9% of total loans, down from 15.5%, and net NPL is 5.5% down from 10.0%.
Mr. Tan Kong Khoon, President & CEO of Bank of Ayudhya, said, “We are satisfied with our 2008 performance. Our first inorganic growth activity, the GECAL acquisition, has yielded positive results. For organic growth, the Bank also recorded a favorable loan growth of Baht 44 billion in a very challenging year. While loan growth was strong, our asset quality also continued to improve, demonstrating our strong underwriting policies and effective risk management.”
“In addition, we set aside 100% provision for our USD 85 million CDO investment of which none are directly invested in sub-prime mortgages. We believe we should be able to write back some of loss marked before the maturity date in 2012. Taking into account a final additional Baht 2.29 billion provision for CDO investment set aside in 2008, we report a favorable improvement in operating profit. This reflects our staff’s hard work, committed efforts, and that the foundation we have strengthened are bearing fruit.” he added.
In 2009, BAY targets to increase a net loan growth of THB 35 billion, representing 6% growth in loan portfolio of the Bank and its subsidiaries. The target is broken down into growth in corporate lending of Baht 9 billion, Baht 11 billion for SME and Baht 15 billion for retail lending.
“In the midst of the global financial crisis and economic slowdown, we are confident that the foundation we have strengthened, and the strong capital adequacy ratio at above 15% will help us weather the tougher business conditions in 2009 and enable us to achieve our business objectives.” Mr. Tan Kong Khoon concluded.
As of December, 2008, on a consolidated basis, the Bank recorded Baht 745.3 billion baht in total assets representing an increase of Baht 92.9 billion or 14% as compared to the end of 2007, Baht 557.1 billion in loans representing an increase of Baht 106.7 billion or 24%, and Baht 537.4 billion in deposits representing an increase of Baht 37.7 billion or 8%. The Bank maintained a strong capital base with a BIS ratio of 15.6% and tier 1 capital of 12.8%.
About Bank of Ayudhya Public Company Limited
Bank of Ayudhya Public Company Limited [symbol in SET: BAY], established on January 27, 1945, is the fifth largest commercial bank in Thailand in terms of total assets. BAY provides a full range of banking services to both its commercial and individual customers through 579 branches nationwide. On 3 January 2007, BAY and GE Capital, a premiere global consumer financial services firm, have successfully become strategic partners. GE Capital now holds 33% stake in BAY. Plans are underway to leverage the synergies of both BAY and GE Capital in helping to achieve BAY’s vision to become the most admired universal bank in Thailand. For more information, please visit Bank of Ayudhya website, www.krungsri.com.
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