3QFY17 profit flat y‐y and q‐q, in line with forecast: BBL posted a 3QFY17 profit of Bt8.2bn in line with our forecast. In this period, the quarterly profit inched up a paltry 1.3% y‐y and 1.4% q‐q as mounting loan‐loss provisions put a lid on the bottom‐line growth driven by rising interest and fee incomes and higher gains on investments.

3QFY17 loans down but NPLs still on the rise: In 3QFY17, BBL reported its loan book shrank 2% q‐q, swinging its YTD loan portfolio back to contraction territory, down 0.1% from a growth of 1.9% YTD in the previous quarter. Corporate loan repayments largely took the blame for the loan contraction in this period. Despite shrinking loan book, its NPL ratio however climbed further to 3.8% in this period from 3.7% in the prior quarter.

FY18 profit outlook revised up to Bt40bn, rating upgrade to ‘ACCUMULATE’ with upwardly revised FY18 target price of Bt193/share: We leave our FY17 profit view for BBL unchanged at Bt32bn, up 1.1% y‐y but we nudge our FY18 profit outlook for the bank higher to Bt40bn, up 25% y‐y to reflect upside from its new 15‐ year distribution agreement for a strategic bancassurance partnership with AIA. The above FY18 profit upgrade also leads us to raise our FY18 target price for BBL to Bt193/share. As the new target offers more but limited upside from current trading levels, we therefore upgrade BBL shares to ‘ACCUMULATE’ from ‘NEUTRAL.’