Kasikornbank (KBANK) reported better-than-expected fourth-quarter earnings at 13.2 billion baht on Thursday, surging both quarter-on-quarter and year-on-year. The result led the bank’s stock to gain around 8 per cent with the largest value traded of the morning session.
The bank’s financial performance in the last quarter of 2020 was 99 and 51 per cent higher than the previous quarter and the last quarter of 2019, respectively. It beat the estimation of Krungsri Securities of 93 per cent, and was 128 per cent above market consensus.
As of 11.34 am, KBANK rose 7.76 per cent to 125 baht per share with a massive trading value of 5.03 billion baht.
An analyst at Krungsri has maintained the ‘Buy’ rating on KBANK at the target price of 103 baht per share. “We see a potential catalyst from strong earnings results in the fourth quarter which could boost near-term sentiment.”
This could “result in upward earnings revision especially after a mild trajectory of non-performing loan ratio and much lower provision expense than expected.” said the analyst.
However, the bank’s full-year earnings for 2020, at 29.5 billion baht, were still 24 per cent lower than the record 2019, due to higher loan-loss provisions over the year, to face the uncertainties of the Covid-19 pandemic.
A key positive factor in the fourth quarter was a sharp fall in provisions, which declined by 94 per cent to 669 million baht versus 10.8 billion in the third quarter while the ratio of non-performing loans (NPL) remained stable at 3.93 per cent.
The bank’s gross NPL value rose slightly quarter-on-quarter to 101 billion baht from 96.7 billion. Loan growth expanded 4 per cent to 2.2 trillion baht but net interest margin softened by 3.08 per cent to 9 basis points (bps).
The Krungsri analyst added that the current loan loss reserves should be sufficient to withstand the Covid-19 impact after most borrowers managed to resume loan payments after the debt moratorium expired during the quarter.