Ms. Kattiya Indaravijaya, Chief Executive Officer of KASIKORNBANK, said Thailand's economic activity in the third quarter of 2024 showed an uneven recovery, particularly in the manufacturing sector which faces structural issues, and in private spending where both investment and household consumption are under pressure from rising costs, debt burdens, and incomes that have not returned to their normal levels. For the rest of 2024, although the Thai economy is expected to maintain its growth path, attention must be paid to the impacts of flooding and fluctuations in the Thai baht, as well as the slowdown in major global economies, geopolitical tensions, and the slow recovery in domestic spending, all of which pose risks to Thailand's economy going forward.
Amidst the challenges of various factors, KBank continues to focus on 3+1 strategic priorities to deliver sustainable value to all stakeholders in unpredictable economic environment.
In the third quarter of 2024, KBank and its subsidiaries reported net profit of Baht 11,965 million, a decrease of Baht 688 million or 5.43% compared with the preceding quarter, mainly due to a decrease in non - interest income, mostly from the insurance business. However, net fees and service income increased, partly due to fees from international trade services and brokerage fees. Additionally, net interest income slightly decreased compared with the preceding quarter, due to uneven overall economic recovery along with revamping credit process to increase efficiency in granting quality new loans. Net interest margin ratio stood at 3.61%, decreased from the preceding quarter, as a result of net earning assets from transactions related to the management of a particular fund, which had a short-term impact on the Bank. However, excluding these transactions, net interest margin ratio remained at a level similar to the preceding quarter. Others operating expenses of Baht 21,501 million, slightly decreased from the preceding quarter due to the Bank's ongoing expense management and operational efficiency enhancements. KBank and its subsidiaries set aside for expected credit loss (ECL) of Baht 11,652 million, which was in line with the preceding quarter, and in alignment with the ongoing prudent approach that ECL was at suitable level, reflecting the current situation and supporting uncertainties of various factors including fluctuations in the global economy that may affect the economic environment.
Operating performance for the nine-month of 2024, KBank and its subsidiaries reported operating profit before expected credit loss and income tax expense of Baht 85,159 million, an increase of Baht 3,861 million or 4.75%. This growth was driven by an increase in net operating income of Baht 7,501 million or 5.29%, which was higher than an increase in other operating expenses of Baht 3,640 million or 6.02%, in line with business volume expansion. Although the expected credit loss (ECL) decreased compared with the same period of 2023, the Bank and its subsidiaries set aside ECL with the ongoing prudent approach and supporting uncertainties of various factors that may affect the economic situation. Therefore, ECL for the third quarter was Baht 11,652 million, which was an approximate to the preceding quarter. As a result, net profit was Baht 38,104 million, an increase of Baht 5,087 million or 15.41% from the same period of 2023.
Net operating income was Baht 149,260 million, an increase of Baht 7,501 million or 5.29%, mainly from net interest income of Baht 113,031 million, an increase of Baht 3,436 million or 3.14%, in line with market conditions. Recently, the Bank has implemented various measures, including reducing interest rates on loans to assist vulnerable customers and customers affected by flooding in many areas, aiming to alleviate their hardships so they can recover more swiftly. Net interest margin ratio stood at 3.66%. Net fees and service income was Baht 24,809 million, an increase of Baht 1,178 million or 4.98%, mainly due to fees from wealth management through the offering of comprehensive financial products from the Bank and its subsidiaries, as well as partners, and fees from credit services. Additionally, there was an increase in gains from financial instruments measured at fair value through profit or loss and investment income, along with increased revenue from foreign exchange transactions which were in line with the recovery of tourism. This resulted in non - interest income of Baht 36,229 million, an increase of Baht 4,065 million or 12.64%. Meanwhile, other operating expenses was Baht 64,101 million, an increase of Baht 3,640 million or 6.02%, due to employee expenses, IT-related expenses to support the expansion of customer service channel and marketing expenses in line with the increase in revenue, which were driven by business volume expansion. The Bank and its subsidiaries continue focusing on effective expense management and continuous operational efficiency improvements. As a result, cost to income ratio stood at 42.95%, similar to the same period of 2023.
As of 30 September 2024, KBank and its subsidiaries' total assets were Baht 4,367,025 million, an increase of Baht 83,469 million or 1.95% over the end of 2023. Most of an increase came from interbank and money market items (Assets) of Baht 663,457 million, an increase of Baht 94,449 million or 16.60%, as a result of KBank's liquidity management. However, net loans was Baht 2,321,531 million, a decrease of Baht 49,961 million or 2.11% due to uneven overall economic recovery and along with the revamping credit process to increase efficiency in granting quality new loans in order to reflect an appropriate risk and return level. Additionally, in alignment with the Bank's policy of prudently managing assets quality for maximum efficiency, the part of unsecured business loan which ceased operation, the Bank has a plan to sell in the future and reclassified this part as financial assets measured at fair value through profit or loss. Furthermore, the Bank's subsidiary plan to establish a joint venture with Bangkok Commercial Asset Management Public Company Limited (BAM) to operate under an aim of managing non-performing assets, as previously disclosed to the Stock Exchange of Thailand. Deposits was Baht 2,770,120 million, an increase of Baht 70,558 million or 2.61%, resulting in a loans to deposits ratio of 87.85%. Excluding the short-term increase in deposits, loans to deposits ratio was an approximate to the previous quarter. NPL gross to total loans was 3.20%, which was slightly increased compared with the previous quarter. However, the Bank continues to closely monitor loans quality in light of the recent flooding situation and considers setting aside adequate ECL with prudent approach, resulting in coverage ratio of 150.72%. In addition, as of 30 September 2024, KASIKORNBANK FINANCIAL CONGLOMERATE's Capital Adequacy Ratio (CAR) according to the Basel III Accord remained strong at 20.58%.