In 2016, the Thai economy registered 3.2 percent growth, which was stronger than in the previous year, mainly due to the public sector investment. Although other factors that led to economic growth gradually recovered, they were adversely affected by domestic problems and the economic conditions in trading partner countries. Overall demand for new loans in the commercial banking sector grew at a relatively low rate while the competition among commercial banks in relation to deposit mobilization became somewhat less intense than in the previous years.
In the past year, Thanachart Group achieved satisfactory performance. However, TBANK’s total assets and loans decreased slightly, mainly due to the more cautious policy adopted by the Bank in order to mitigate the risks associated with lending. As a result, the new generating of hire purchase loans were less than the loan repayments, particularly in the first half of the year.
The above policy helped TBANK reduce loan losses significantly, when compared with the previous year. This was the main reason why Thanachart Group registered a higher profit than in the previous year, as planned. In this connection, the Company’s profit in 2016 amounted to 6,013 million baht or 5.16 baht per share, representing a 10.61 percent increase over the previous year.
Moreover, thanks to its higher profitability and ability to better control loan quality, TBANK’s financial position was stronger and more stable in several areas including, among others, the following:
- Non-performing loans continuously decreased from the prior-year period. As a result, the NPL ratio decreased from 2.84 percent at the end of 2015 to 2.29 percent at the end of 2016. On the other hand, the average industrial non-performing loan increased.
- The above decrease in non-performing loans caused the coverage ratio to increase higher than the industrial coverage ratio on average, i.e. representing an increase from 119.42 percent at the end of 2015 to 151.16 percent at the end of 2016.
- Moreover, TBANK could still strengthen its capital in a continuous manner. In particular, its BIS ratio at the end of 2016 accounted for 19.15 percent, compared to 17.92 percent at the end of the prior year. The level was significantly higher than the minimum requirement imposed by the regulator.
- Maintaining sufficient liquidity is essential for commercial banks’ business operations. In this connection, TBANK is still able to follow its policy to hold more liquidity than is needed in a continuous manner. In line with the requirements under the Basel III regulations, the Bank is able to maintain the Liquidity Coverage Ratio (LCR) at the level above 100 percent, which is much higher than the minimum level imposed by the BOT for 2017.
Although in 2017 the Thai economy will still face the same problems and grow at a low level, let alone the more intense competition in deposit mobilization, lending, and digital services, the Board of Directors is still confident that Thanachart Group will most likely be able to maintain its stability and satisfactory performance. As a result, the Board of Director adopted a resolution approving the increase of the interim dividend payment from 0.70 baht per share in 2015 to 0.80 baht per share in 2016. As well, the Board of Directors proposed to shareholders that they approve the final dividend payment of 1.20 baht per share. The total dividend payment amounted to 2.00 baht per share, which accounted for 38.76 percent of the net profit for the year.
Thanachart Group keeps conducting its business affairs by continuously adhering to the principles of good corporate governance. As a result, based on the assessment of various organizations, Thanachart Group is among the leaders in these areas. Apart from remaining committed to the corporate governance principles, the Group takes into consideration the pursuit of sustainable development path. In particular, it pays attention to the development of several areas related to the caretaking of all groups of stakeholders as well as society and the environment. As well, special emphasis is placed on energy conservation and the use of limited resources in the most effective manner. The Group is also full of strong determination to fight against all forms of fraud and corruption. Moreover, it announces to its customers, business counterparts, and various organizations such intention. The key objective is to enlist wider anti-corruption cooperation.
On behalf of the Board of Directors, I would like to thank all shareholders for your continuous trust and support to the Company’s business operations. As well, I would like to thank all customers, business counterparts, and groups of stakeholders for the confidence and trust in Thanachart Group’s products and services. Not less importantly, I would like to thank all executives and employees of Thanachart Group’s member companies for your total dedication to carry out your duties to the best of your abilities and for your continuous cooperation in making Thanachart Group successful. In conclusion, I believe that, with the support from all parties concerned, Thanachart Group will not only grow stronger but also accomplish more goals in a continuous manner in the future.