We expect an aggregate Bank coverage profit dive of 20% YoY for 1Q21, due to slimmer NIMs and heavier OPEX. But our model points to a Bank coverage earnings jump of 35% YoY for 2Q21, driven by lighter LLPs and strong loan growth. Our sector call is OVERWEIGHT; BBL and TISCO are our top picks.
Expect 1Q21 earnings to dive 20% YoY but rise 14% QoQ
The aggregate 1Q21 profit of the eight banks under coverage is estimated at Bt36bn, down 20% YoY, due to slimmer NIMs (our average 1Q21 NIM assumption is 2.9%, down from 3.3% in 1Q20, due to a lower mean lending rate) and heavier OPEX. But that number represents 14% QoQ growth, driven by lighter LLPs (a mean credit cost peg of 153bps, down from 167bps for 4Q20), lighter OPEX (OPEX peaks seasonally in the fourth-quarter—heavy marketing spend and annual staff bonuses) and the absence of OPEX tied to BBL’s merger costs for Permata Bank.