3QFY17 profit down 12.7% y‐y but up 5.4% q‐q, in line with forecast: KBANK announced a 3QFY17 profit of Bt9.5bn in line with our forecast. In this period, the quarterly profit dropped 12.7% y‐y onmounting loan‐loss provisions, which outweighed rising interest and non‐interest incomes, but grew 5.4% q‐q on the back of higher fee income and lower underwriting expenses in bancassurance business.

3QFY17 loans see virtually no growth but NPLs remain on the rise: In 3QFY17, KBANK reported its loan growth remained unchanged from 2QFY17 at 3.2% YTD but NPLs however climbed further higher to Bt68.9bn from Bt66.8bn in the prior quarter. However, its gross NPL ratio held steady at 3.3% in this period despite the NPL increase thanks largely to some NPL write‐offs. Higher loan‐loss provisions also kept its NPL coverage ratio steady at 141%.

FY17‐FY18 profit estimates unchanged, rating cut to ‘NEUTRAL’ with FY18 target price of Bt214/share: For now, we keep our FY17‐FY18 profit forecasts for the bank unchanged at Bt39.7bn and Bt47.6bn, down 1.2% y‐y and up 20% y‐y respectively. Our FY18 target price also remains at Bt214/share but narrowing upside to the target gives us an excuse to cut our rating on KBANK shares to ‘NEUTRAL.’