Commercial banks’ shares fall over Q3 performance
The price of commercial banks’ shares fell sharply due to uncertainty following a weak third-quarter performance, experts said on Thursday.
On Wednesday, the share price of Siam Commercial Bank (SCB) fell by Bt2.50, or 3.75 per cent, to Bt64.25 per share, Kasikorn Bank (KBank) fell by Bt2.75, or 3.67 per cent, to Bt72.25, and Krungthai Bank fell by Bt0.20, or 2.23 per cent, to Bt8.75.
Kasikorn Securities assistant director of research Korakot Sawetkruttamat expected banks to see a collective third-quarter profit of Bt24.8 billion, down 9.6 per cent quarter on quarter and 45.2 per cent year on year.
He also expected their net interest margin to drop because they had granted low-interest loans to corporations.
Meanwhile, he said, reserves for doubtful debts are expected to rise after the expiration of a debt moratorium on October 22.
“The securities company expects banks excluding KBank to set up reserves for doubtful debts at Bt50.6 billion in the third quarter. The figure is expected to rise to Bt54 billion in the fourth quarter. These Bt54 billion of reserves comprise SCB’s Bt14 billion, KTB’s Bt14 billion, BAY’s Bt10 billion, BBL’s Bt6 billion, TMB’s Bt7 billion, KKP’s Bt1 billion and Tisco’s Bt2 billion,” he said.
CGS CIMB Securities senior vice president of research Kitichan Sirisukarcha said the decline in bank shares was due to uncertainty over the expiration of the debt moratorium.
He said banks’ non-performing loans in the next three months were expected to increase if the debt moratorium period was not extended.
“Also, we expect banks’ reserves for doubtful debts in the fourth quarter to be the highest of the year and would affect their fourth-quarter performance, while their performance would drop even further due to a decline in loan requests amid the economic slowdown,” he said.
“We expect banks’ profit this year to be Bt96.87 billion, down 41 per cent from Bt164.74 billion during the same period of the previous year, while their profit is expected to increase to Bt97.73 billion and Bt133.03 billion in 2021 and 2022, respectively, but still lower than before the Covid-19 outbreak emerged.”
Kitichan added that the securities company still weighs investment in bank shares the same as the market even though its price was currently at a low level due to a lack of positive sentiment.
He advised people to invest in other shares that have gained positive sentiment.
UOB Kay Hian Securities senior director of research Tanadech Rungsrithananon said the price of bank shares dropped due to various negative sentiments, such as Bank of Thailand’s order to hold off paying interim dividends, the expiration of the debt moratorium and uncertainty over weak banks’ third-quarter performance.
“Separately, bank shares have been pressured by the escalating political unrest,” he added.
