Banks expected to report profitable first quarter
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Net profit of the banking sector in the first quarter of this year is expected to register a rebound after dropping in the fourth quarter of 2011 because of the flood disaster, brokerage houses say.
Tisco Securities estimates the net profit of banking industry in the first quarter will rise by 18 per cent year on year and 68 per cent quarter on quarter thanks to a 13-per-cent rise in interest income and the lower corporate tax. The industry has normalised its loan loss provisions and had no special expenses as it did in the previous quarter.
However, lower interest rates have had an impact on net interest margin (NIM) and are expected to pressure the growth of net interest income.
Tisco Securities predicts that Kasikornbank will record the highest growth of net profit at 30 per cent, followed by Bangkok Bank at 24 per cent and Siam Commercial Bank (SCB) at 17 per cent.
Foreign investors are optimistic on the Thai economy, and economic figures suggest that the country has been able to recover from the flood crisis, including the quick recovery of domestic consumption and investment.
Tisco says the soft-loan scheme, the economic stimulus packages and the recent rise in the minimum daily wage would increase demand in the second half of the year, resulting in double-digit growth in lending.
Maybank Kim Eng Securities (Thailand) expects eight banks listed on the Stock Exchange of Thailand excluding LH Bank will post a combined net profit of Bt37.48 billion for the first quarter, an increase of 92 per cent quarter on quarter, though up by just 1 per cent year on year. Four major banks – Bangkok Bank, KBank, Krung Thai Bank and SCB – are expected to see record profits.
Lower interest rates and higher financing costs are main two factors putting pressure on NIM of the banking industry. Non-interest income should expand by 17 per cent for the quarter in line with loan growth and financial transactions. Moreover, the reduction of corporate income tax to 23 per cent is beneficial to the bottom line.
Based on expected growth in gross domestic product of 5.2 per cent, the brokerage houses estimates lending this year will grow in all segments, driving overall lending growth of 13 per cent this year.
