KBANK shares plunges, hitting decade-low

Kasikornbank (KBANK) shares shrank to 75 baht per share or -1.96 per cent on Wednesday at 3:35 p.m. which is its lowest point since October 2009.

KBANK was one of four Thai banks implicated in the FinCEN Files leaked by the International Consortium of Investigative Journalists (ICIJ), where major lenders flag potentially illegal transactions to the US government.

This incident has shrunk KBANK shares down from Monday as investors viewed it as a negative sentiment.

An analyst from Bualuang Securities expected KBANK’s third-quarter result to contract but not as severe as the second quarter which was a 78 per cent decline on its earnings.

KBANK’s earnings in the third quarter could dive down by 31 per cent year-on-year due to heavier LLPs-setting (Limited Liability Partnerships), lower investment gains, and NIM (Net Interest Margin) squeeze, according to Bualuang.

This means that the asset quality of KBANK will take time to improve given the weak state of the economy and its concentration in SME lending. This could lead to high loan loss provisioning. 

Bualuang downgrades KBANK recommendation from ‘Trading Buy’ to ‘Hold’ at the target price of 99 baht.

A Phattra analyst also said in a research note that higher credit cost and the COVID-19 outbreak should significantly affect the bank’s profitability for the next two years under the forbearance program, while they rate ‘Underperform’ with the target price of 82 baht.

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