LHFG Reports Slight Decline in 1Q22 Earnings on Higher ECL in Conservative Principles

LH Financial Group Public Company Limited (SET: LHFG) has announced its 1Q22 consolidated financial statement through the Stock Exchange of Thailand as follows;

Quarter 1Q22 1Q21
Net Profit (Loss)
Million Baht
511.74 560.49
Earning Per Share
0.0240 0.2700
% Change -8.70

LHFG reported a net profit of 511 million baht in 1Q22, decreased slightly by 8.70% from a net profit of 560 million baht in 1Q21. The decrease was mainly due to the expected credit loss expenses at a high level according to conservative principles. This increase was to accommodate the expansion of credit and potential impacts of various relief measures for customers. But if considering operating profit before setting aside the provision (net loss on financial instruments measured at fair value through profit or loss and gain on investments excluded) or operating profit of the company, itamounted to 1,117 million baht, increased by 9.1 percent when compared to the same period last year. This was an increase in net interest income, fee income and effective operating cost control.

In the first quarter of 2022, net interest income rose sharply at 17.6 percent when compared to the same period last year following the loan growth due to the bank’s strategy to expand its customer base to higher yielding loans. As a result, SME and retail loans grew by 5.0 and 6.3%, respectively. 

In addition, the bank managed its financial costs well by increasing low-cost savings deposits resulted in net interest margin rising to 2.39% from 2.21% when compared to the same period last year, and operating costs per revenue (Cost-to-Income Ratio) was still good at only 43 percent, close to the same period last year.

For credit quality, the credit-impaired loan to total loans was 2.54 percent and coverage ratio was high at 187.4 percent. While the capital fund was solid with the total capital adequacy ratio at 17.60% higher than the requirements of the Bank of Thailand.