20151104-Maybank_KERPL-3Q_results_hurt_by_rising_provisions_16页_656kb

报告摘要

Thailand Banks 3Q Summary

Core Content

This document provides an analysis of the third-quarter performance of nine Thai banks, highlighting the impact of rising non-performing loans (NPLs) on their financial results. It outlines the key financial metrics, the reasons behind the NPL surge, and the analyst's view on the sector's future performance and stock recommendations.

Main Points

3Q Earnings Weakness: The 9 banks under coverage reported weak earnings, with net profit declining by 13% QoQ due to a 47% QoQ increase in provisions.
NPL Surge: NPLs rose to 3.52% of total loans, an increase of 15% QoQ, driven primarily by the reclassification of Sahaviriya Steel Industries (SSI) loans and lingering economic weakness.
Sector Performance: Despite the NPL increase, some positive developments were noted, including improving net interest margins (NIM) and slight loan growth.
Non-Interest Income: Non-interest income surged 11% QoQ, mainly due to asset sales, particularly by SCB, KKP, and BBL.
Operating Expenses: Banks managed to reduce operating expenses by 2% QoQ, with TISCO seeing a significant 36% drop.
PPOP Growth: Pre-provision operating profit (PPOP) increased by 10% QoQ, supported by improved NII, Non-NII, and reduced expenses.
Asset Quality: The HP sector showed improvement in asset quality, with NPLs declining for TCAP and KKP.
Recommendations: The analyst upgraded SCB and TCAP to BUY, while maintaining BBL and KBANK as Top Picks.

Key Financial Highlights

Net Interest Income (NII): Increased by 1% QoQ to THB107.9b, with BBL showing the largest growth at 9% QoQ.
Non-Interest Income (Non-NII): Surged 11% QoQ to THB71.6b, driven by asset sales.
Provisions: Increased by 47% QoQ to THB49.3b, with SCB and KTB seeing the most significant rises.
Net Profit: Declined by 13% QoQ to THB44.3b, with KTB experiencing the largest drop at 37%.

Key Drivers of NPL Increase

Reclassification of SSI Loans: Estimated to contribute THB35b to the THB47b increase in NPLs.
Economic Slowdown: Continued to impact the private sector's debt servicing ability, leading to more defaults and NPLs.

Analyst View

Revised Projections: The analyst revisited projections and rolled over target prices to 2016.
Downside Risk: Increased downside risk to economic growth has led to revised assumptions with lower loan growth and higher NPL and credit cost.
Stock Recommendations: Recommendations were unchanged for most banks, but SCB and TCAP were upgraded to BUY.

Summary Table of Key Metrics

Bank	Net Profit (THB, mn)	% QoQ	% YoY	ROE (%)	ROA (%)
BAY	4,852	+12%	+38%	10.5%	1.2%
BBL	9,057	+13%	-5%	10.3%	1.3%
KBANK	10,117	-12%	-19%	14.6%	1.6%
KKP	923	+23%	+9%	10.0%	1.5%
KTB	5,347	-37%	-42%	9.0%	0.8%
SCB	9,018	-32%	-32%	12.3%	1.3%
TCAP	1,353	-3%	+13%	10.5%	0.6%
TISCO	810	-20%	-26%	12.2%	1.1%
TMB	2,815	+25%	+18%	15.5%	1.4%
Total	44,293	-13%	-17%	11.6%	1.2%

Stock Recommendations

Buy: SCB, TCAP
Hold: BAY, KTB, TISCO, TMB
Top Picks: BBL, KBANK

Summary of Key Factors Affecting Performance

Rising NPLs: Led to increased provisions and lower net profit.
Economic Weakness: Continued to affect the private sector's ability to service debt.
Asset Sales: Provided a boost to non-interest income, especially for SCB.
Improved NIM: Supported net interest income, with BBL showing the most significant improvement.
Cost Management: Banks reduced operating expenses, with TISCO seeing a notable decrease.
Sector Outlook: Expected to remain weak in the short term, with potential forecast downgrades.

Conclusion

The 3Q results for Thai banks were affected by the rise in NPLs, particularly due to the SSI reclassification and economic slowdown. While some banks like SCB and TCAP showed improvement in non-interest income, the overall net profit weakened. The analyst upgraded SCB and TCAP to BUY, maintaining BBL and KBANK as Top Picks, and revised projections to reflect the increased downside risk to economic growth.

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