Krung Thai Bank

Krung Thai Bank Plc (KTB)

Event
- KTB after the market close on 21 January reported 4Q13 net profit of Bt10.1bn (EPS
Bt0.72), up 13% QoQ and 981% YoY. The result was above market consensus and
our forecasts by more than 30% on non-interest income, provisions and investment
gains from the Vayupak Fund (Bt2.9bn). Overall asset quality improved QoQ with
better NPL ratio and coverage. The company will hold an analyst meeting on 22
January.
Impact
- Loan growth slightly below our forecast. 4Q13 gross loans went up 2% QoQ
and 12% YoY, slightly below our full-year forecast of 13%. Key loan growth drivers
were corporate and retail loans.
- NIM in line. 4Q13 NIM was flat QoQ at 2.84%. Asset yield improved 7bps QoQ
while funding cost was also higher by 7bps QoQ. The better asset yield might have
been due to the successful debt restructuring of big corporate loans. which we
observed at other banks in 4Q13. Both LDR and LDR + borrowing declined by 3-
4ppt, to 91% and 85%, respectively.
- Strong non-interest income offset by high OPEX. KTB’s non-interest income
grew strongly in 4Q13, up 11% QoQ and 28% YoY, 17% higher than our forecast.
However, OPEX also rose strongly, up 22% QoQ and 24% YoY of which major
increases were from personnel and other expenses. The higher personnel expenses
(up 21% QoQ and 30% YoY) might have been due to the accrual of performance
bonus which KTB normally accrues in 1Q. Due to high OPEX, PPOP declined 8% QoQ
and up only 3% YoY.
- Improving asset quality. KTB set aside Bt3.1bn loan loss provisions in 4Q13,
equivalent to 73bps of total loans vs our forecast of 80bps and company guidance of
Bt1.5bn. The extra provisions were made possible due to the extra gains from the
Vayupak Fund (Bt2.9bn), which was redeemed in 4Q13. Total NPLs declined 7% QoQ
to Bt55bn due to write-offs (Bt5.4bn). NPL ratio dropped to 3.2% from 3.5% in 3Q13
with higher NPL coverage of 112% (vs 108% in 3Q13).
Earnings and target price revision
- No change. We will revisit our forecasts after a fuller review of the results.
Price catalyst
- 12-month price target: Bt29.00 based on a DDM methodology.
- Catalyst: 1Q14 results, monthly loan growth
Action and recommendation
- Maintain OP and TP of Bt29.00.