In the first quarter of 2022, the Thai economy expanded at a slower pace due to the spread of the Covid-19 Omicron variant with another spike of new infections. The government responded by curbing travel entry, resulting in the slow recovery of international tourism. Meanwhile, the war between Russia and Ukraine pushed up global oil and energy prices as well as the cost of some commodities. As a result, inflation rates in many countries, including Thailand, have increased causing a slowdown in domestic private consumption. Additionally, central banks of some countries increased policy rates, which have impacted economic growth and global commerce. Consequently, the Thai export sector for the first 2 months of 2022 grew only 12.2 percent compared with 22.1 percent in the previous quarter. Going forward, the volatility of financial markets and world economy will be important factors to closely monitor.
The recovery of Thailand's economy is expected to be slow and uneven. Some businesses including exports have recovered back to where they were prior to the Covid-19 crisis while tourism-related sectors have been recovering more slowly. Bangkok Bank continues to support customers in each sector in accordance with their needs by providing short-term liquidity to help businesses stay afloat and offer working capital when their businesses recover. With the commitment to be a trusted partner and reliable close friend, the Bank focuses on sharing knowledge and expertise to support customers to achieve sustainable growth by adjusting business model in line with changing market trends or enhancing the opportunities for international business expansion. At the same time, the Bank places importance on prudent risk management, together with maintaining its financial stability, liquidity and capital positions.
Bangkok Bank and its subsidiaries increased net profit by 2.8 percent in the first quarter
The Bank and its subsidiaries reported a net profit of Baht 7,118 million, an increase of 2.8 percent from the first quarter of 2021. Net interest income rose by 10.4 percent contributed from loan growth, while the net interest margin stood at 2.11 percent. Non-interest income declined by 16.1 percent primarily from lower gains on mark to market of financial assets in line with the market environment, and lower net fees and service income from credit card and bancassurance and mutual funds. Operating expenses decreased by 1.6 percent, resulting in
a cost to income ratio of 49.8 percent. The Bank set aside expected credit loss of Baht 6,489 million.
Bangkok Bank maintains a healthy financial position, high liquidity and capital positions under its prudent management approach
At the end of March 2022, the Bank's total loans amounted to Baht 2,587,534 million, the same level as the end of December 2021. There was a net increase in loans to large corporate customers while loans made through the Bank's international network decreased. The non-performing loan to total loans ratio was 3.3 percent. The Bank's prudent management approach achieved a healthy increase in the allowance for expected credit losses to non-performing loans ratio to 229.0 percent.
As of March 31, 2022, the Bank's deposits amounted to Baht 3,194,460 million, an increase of 1.2 percent from the end of December 2021, reflecting customers' desire to maintain their highly liquid assets during a time of uncertainty. The loan to deposit ratio was 81.0 percent. Meanwhile, the total capital adequacy ratio, Tier 1 capital adequacy ratio and Common Equity Tier 1 capital adequacy ratio of the Bank and its subsidiaries were 19.5 percent, 16.0 percent and 15.2 percent respectively, comfortably above the Bank of Thailand's minimum capital requirements.