Kasikornbank PCL (KBANK): 3QFY17 profit in line with forecast October 24, 2017

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.’

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!