Bangkok Bank
Better Q2 2013 profit, led by gain booked on asset sales to TAMC
Bangkok Bank Plc
2Q13 earnings beat all estimates
BBL announced 2Q13 earnings of Bt10.3bn, up by 16% YoY and 14% QoQ. The result beat our estimate by 5.6% and the Bloomberg consensus by 10.8%, attributable to a windfall gain of Bt2.6bn on asset sales to the Thai Asset Management Corporation (TAMC) since 2011. The bank’s 2Q13 pre-provision operating profit was Bt11.8bn, up by 5% YoY and 3% QoQ. 1H13 earnings jumped 12% YoY to Bt19.3bn, which represents 48% of our FY13 projection.
Results highlights
Lending expanded by 3.9% QoQ and 8.1% YoY to Bt1.67trn at end-June. The SME and corporate portfolios were the drivers. Deposits rose by 2.2% QoQ and 11.9% YoY as of end-June. Hence, NIM dipped 5 bps QoQ to 2.42%, as expected, from 2.47% the previous quarter. 2Q13 fee income jumped by 15% YoY and 9% QoQ to Bt7.1bn (and beat our estimate by 3%). OPEX was Bt10.7bn, up by 9% YoY and 11% QoQ. Given a slimmer NIM and higher OPEX, the cost/income ratio rose to 47.4% in 2Q13 from 45.4% in 1Q13.
BBL set heavy loan loss provisions of Bt3.4bn for the quarter, up by 103% YoY and 94% QoQ. The NPLs/loans ratio inched up slightly to 2.4% from 2.3% at end-March, while the loan loss coverage ratio was 206% at end-June, up from 203% three months earlier.
Outlook
We anticipate stronger QoQ lending growth in 3Q13 on seasonality, led by the corporate and SME categories. BBL’s LLP-setting will decline QoQ in 3Q13. Note that extra gain on asset sales to TAMC could offset the effect of heavier LLPs in FY13 than assumed.
What’s changed?
We maintain our FY13 and FY14 earnings projections unchanged at Bt40bn and Bt47bn, respectively.
Recommendation
BBL’s risk profile is the most resilient to economic uncertainty of the banks under our coverage. There is scope for upside to our earnings forecast from fee income expansion and OPEX management. BBL currently trades at an inexpensive YE13 PBV of 1.3x against a regional mean of 2.0x. Our BUY rating stands.
