Kasikorn Bank
Play
Preview 4Q15: Negative surprise on opex BUY
Kasikorn Bank Plc (KBANK)
4Q15F: Opex to be more and provisions less than expected. Management guidance for 4Q15 indicates heavier opex than anticipated but also lower provisions. We forecast a fall in 4Q15 of 41% YoY and QoQ to Bt5.9bn, based on guidance below.
1) One-off expenses of Bt2.4bn for IT impairment in 4Q15 with a full-year cost to income ratio of 45-46%, in line with its target of 45-47%.
2) Provisions of 1.6% of total loans in 2015, slightly below the earlier guidance of 1.7%. This is in line with its expectation of a rise in NPL ratio to 2.7% in 4Q15 from 2.62% in 3Q15, slightly below the earlier expectation of 2.8%.
3) Loan growth missed its 2015 target of 6% (5.1% in 11M15) because of yearend corporate loan repayments.
4) 2015 NIM is expected to be 3.6-3.7% (vs. 3.5-3.7% target). Cost of funds eased in 4Q15 but this was partly offset by pressure from rising NPLs.
5) Non-NII growth for 2015 is in the low teens, in line with its target. The bank saw slowing non-NII, mainly from net insurance income in 4Q15.
Maintain bearish guidance for 2016. KBANK stands by its 2016 targets of loan growth of 6-7%, a slip in NIM to 3.4-3.6%, slowing non-NII
growth at up to 10%, stable cost to income ratio at 45-47%, continued large provisioning at up to 1.7% of total loans, and a continued rise in
NPLs to 3.5-3.6% of total loans.
