LHFG Reports a Decline of Net Profit in 2020 by 36% as ECL Jumps 110%

LH Financial Group Public Company Limited (LHFG) has reported its yearly financial statement of 2020 through the Stock Exchange of Thailand as follows;

LHFG reported a net profit in 2020 at 2,056 million baht, decreased 36.02% from last year, mainly from the increase in expected credit losses (ECL) by 110.8%.

 

In 2020, net interest income amounted to 4,725.7 million baht, increased by 5.3% when compared to 2019. Interest income was 7,855.4 million baht, decreased by 9.1% and interest expenses were 3,129.7 million baht, decreased by 24.7% when compared to2019.

The decrease in Interest income was due to LHFG’s subsidiary which operates banking business, reduced the loan interest rate to assist customers impacted by the COVID-19 pandemic, and the distribution of benefits from the reduced contributions to the Financial Institutions Development Fund (FIDF) and the increasing vigilance on lending approval. As a result, the bank’s interest expenses decreased from the reduction of FIDF fee from 0.46% to 0.23% per year according to the governmental measures during 2020-2021.

In 2020, net non-interest income amounted to 3,021.6 million baht, decreased by 11.6% when compared to 2019,  mainly due to a decrease in gains on investments.

 

In 2020, LHFG showed the expected credit losses in the amount of 2,298.2 million baht or increased by 110.8% when compared to the 1,090.0 million baht of provision in 2019 according to the previous standard. Consequently, LHFG had the coverage ratio at 119.8%.

As of 31 December 2020, non-performing loans (Gross) amounted to 5,368.0 million baht, increased by 2,224.6 million baht or 70.8% when compared to 2019, which reported at 3,143.4 million baht. NPL ratio was at 2.77% of total loans (including interbank and money market items) when compared to 2019 which was at 1.55%.