Bangkok Bank

Bangkok Bank Plc (BBL)

3Q13 earnings as expected
BBL announced 3Q13 earnings of Bt9.0bn, up 21% YoY but down 13% QoQ. The result was in line with our forecast but 3% above the Bloomberg consensus. The bank’s 3Q13 pre-provision operating profit was Bt12.4bn, up by 8% YoY and 5% QoQ. 9M13 earnings jumped 15% YoY to Bt28.2bn, which represents 75% of our FY13 projection.
Results highlights
Lending expanded by 1.1% QoQ and 8.7% YoY to Bt1.69trn at end-September. The SME and corporate portfolios were the drivers. Deposits were unchanged QoQ and up 5.4% YoY as of end-September. Hence, NIM inched up 4 bps QoQ to 2.46%, as we would have expected, given the scale of loan growth. 3Q13 fee income rose 13% YoY (but declined 5% QoQ on seasonality) to Bt6.7bn, beating our estimate by 3%. OPEX was Bt9.7bn, up 7% YoY but down 9% QoQ. Given a fatter NIM and good OPEX management, the cost/income ratio dipped to 46.3% in 3Q13 from 47.4% in 2Q13.
BBL set heavy loan loss provisions of Bt1.7bn for the quarter, up 13% YoY but down 49% QoQ. The NPLs/loans ratio was unchanged QoQ at 2.4% at end-September, while the loan loss coverage ratio was 201%, down insignificantly from 206% at end-June.
Outlook
We anticipate stronger QoQ lending growth in 4Q13 on seasonality, led by the corporate and SME categories. BBL’s LLP-setting for the quarter is likely to be at about the same level as for 3Q13.
What’s changed?
We maintain our FY13 and FY14 earnings projections unchanged at Bt37.5bn and Bt43.5bn, 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. The stock currently trades at an inexpensive YE13 PBV of 1.3x against a regional mean of 1.9x. Our BUY rating stands.