KBANK earnings surge in Q2 on lower credit loss provisioning

Kasikornbank (KBANK), one of Thailand’s largest banks by assets, on Wednesday posted a 300-per-cent surge in its second-quarter earnings from a year earlier, driven by lower credit loss provisioning.

Other banks, meanwhile, have reported a mixed-bags with some posting similar profits while others struggle on the back of the pandemic.

KBANK

KBANK and its subsidiaries reported 8.9 billion baht in net profit for the second quarter of 2021, contributing to a 19.5-billion-baht net profit for the first six months of the year.

The bank’s performance in the first half of 2021 was 104 per cent higher than in 2020 as it lowered expected credit loss by 39.32 per cent.

Kattiya Indaravijaya, the bank’s chief executive, said the economy in the second quarter was still affected by the pandemic that “weighed upon household and business spending and delayed the recovery path of the tourism sector.”

KBANK set aside higher credit loss provisioning by 2.16 billion, which is 24.9 per cent up from the first quarter of this year, due to high uncertainties from the new variants of Covid-19.

According to the statement, the amount of non-performing loans to total loans as of June 30 stood at 3.95 per cent, slightly up from 3.92 per cent at the end of 2020.

The share price of KBANK, however, fell 3.21 per cent to 105.50 baht before midday despite the jump in its second-quarter profit, due to concerns on surging infections including pressure from foreign markets.

Analysts at KGI Securities expressed the view that the third wave will not change KBANK’s asset quality much as the management has affirmed the situation is still under control.

Bank of Ayudhya (BAY)                                                                             

BAY reported a second-quarter net profit of 14.5 billion baht, up 123 per cent year-on-year, exceeding market estimates. The beat was mainly due to 10.8 billion baht gained from the initial public offering of its unit Ngern Tid Lor (TIDLOR), a lending firm.              

Analysts at Tisco Securities noted that the stock valuation is not yet attractive enough after a strong rally in the past few months.

“Post TIDLOR gains, the market should return its focus to BAY’s core operations which have been soft, in line with peers,” said the analysts.                                    

Bangkok Bank (BBL)          

BBL reported second-quarter earnings of 6.4 billion baht, up 105 per cent year-on-year, as a result of higher net interest income (NII) and non-NII than assumed.

Bualuang research said that the 2021 first-half earnings of BBL comprise 50.5 per cent of their full-year forecast of 26.3 billion baht.

“BBL is currently one of our top picks among the big banks for its inexpensive valuation metrics, good dividend,” said Bualuang Analysts.                

TMBThanachart Bank (TTB)

TTB posted a net profit in the second quarter of 2.5 billion baht, down 18 per cent year-on-year, but still above market estimates.

Analysts at Tisco Securities did not consider this set of results particularly strong, with the topline such as net interest income and retail loans appearing weaker than expected.                  

However, improvement was seen in loan-related fees and trade finance, Tisco said. TTB is still the sector top pick for its promising future growth.

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