Bangkok Bank

Bangkok Bank Plc (BBL)
Q2 2012A exceeded estimates. 2Q12A net profit rose 21% YoY and 11% QoQ to
Bt8.87bn, above our forecast of Bt7.9bn. The deviations mainly came from more
improvement in NIM than expected and lower-than-expected effective tax rate of
16%. Q2 2012A results reflect continued good loan growth, NIM improvement,
stagnant fee income, rising opex and minimal increase in NPLs and provisions.

Key points:

1. Loan growth: In line with our expectations, +2.1% QoQ (vs. 2.71% QoQ for
Q1 2012), mainly driven by corporate and SME loans. 6M12 loan growth was 4.8%
and we see downside risk to our full-year forecast of 14%.
2. Net interest margin: Better than expected, +9 bps QoQ to 2.59%. Yield on
earning assets rose 5 bps QoQ backed by a higher proportion of SME loans. Cost
of funds fell 3 bps QoQ.
3. Non-interest income: Better than anticipated, +5% QoQ, mainly driven by forex
gain and dividend income. Fee income was stagnant both YoY and QoQ, mainly
made up of fees related to credit cards and loans. 1H12 fee income accounted
for 48% of our full-year forecast of +8%.
4. Opex: Higher than expected, +15% QoQ, mainly due to personnel and marketing
expenses.
5. Asset quality: In line with the management guidance, NPLs by amount rose 6%
QoQ, pushing NPL ratio up to 2.94% from 2.84% at 1Q12. Provision expense was
up 8% QoQ. Loan loss reserve (LLR) coverage eased to 187% from 193% at Q1 2012,
still the highest in the sector.