Thai Banks set for 31percent surge in net profit
- January 9, 2013
THE NATION January 8, 2013 1:00 am
Overall net profit of 10 commercial banks is expected to record 31-per-cent growth to nearly Bt170 billion in 2012, though the fourth-quarter results were somewhat weakened by loan-loss provisions and cost-to-income ratios.
Asia Plus Securities said in a research note yesterday that in the fourth quarter alone, the profits of the 10 banks was expected to grow by 90 per cent to Bt40.2 billion year on year but shrink by 9.4 per cent from the third quarter.
Asia Plus previously estimated the fourth-quarter net profits of the banking industry would drop by nearly 20 per cent from the third quarter and 79 per cent from the final quarter of 2011.
Kiatnakin Bank, TMB Bank and Bangkok Bank are expected to show outstanding profit growth, according to Asia Plus.
KK’s profitability in the fourth quarter was driven by fee income from involvement in PTT Exploration and Production’s capital increase and another deal with Tesco Lotus.
TMB Bank’s profit growth was driven by high-yield loans, while Bangkok Bank’s was backed by increased fee income.
According to Asia Plus, KK will report profit in the fourth quarter of Bt1.10 billion, up 19.7 per cent from the third quarter, TMB will show Bt1.64 billion, up by 14.5 per cent, and Bangkok Bank’s profit will grow by 12.5 per cent to Bt8.77 billion.
Krungthai Bank is expected to witness a drop in profit due to the biggest loan-loss provisions. Asia Plus predicts the second-largest bank will report net profit of Bt4.87 billion, compared with Bt8.9 billion in the third quarter.
Kasikornbank and Bank of Ayudhya are expected to record declined earnings as well due to high loan-loss provisions and cost-to-income ratios.
Loan-loss provisions of banking industry in the fourth quarter will have increased by 41.7 per cent from the third quarter; however, this was not because of high rates of non-performing loans but was a strict measure by each bank to deal with economic volatility.
The cost-to-income ratio in the fourth quarter is projected to rise to 49.4 per cent from 45.5 per cent in the previous quarter.
The strong earnings in the first three quarters of 2012 are sufficient for the banking industry to record new profit highs for the full year.
For this year, the outlook for lending remains aggressive growth, as the brokerage house expects expansion by 13.6 per cent from 2012. Business loans are in the spotlight thanks to the infrastructure investment by the government and lending demand due to urbanisation, driven by the upcoming Asean Economic Community.
Finansia Syrus Securities forecasts that the fourth quarter of 2012 will show the lowest profits for the banking sector because of high loan-loss provisions and high cost-to-income ratios.
KK, Siam Commercial Bank and Bangkok Bank are expected to show outstanding profit growth in the quarter, while KTB and KBank will report the significant reductions.
However, the market will be interested in the strong yearly performance of the banks, not quarterly profits, Finansia Syrus expects.