Equity Analysis /

Thailand (Bualuang): Bank - Ongoing recovery through 2022

  • 2022 coverage earnings should rise 7% YoY, led by lighter LLPs

  • Scope for upside to our 2022 Bank coverage profit forecast

  • BBL and KBANK stand to profit most from rising bond yields

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
4 January 2022

We expect aggregate Bank coverage profit growth of 7% YoY for 2022. Furthermore, we have run a scenario analysis of the possible effect of higher bond and corporate loan yields on earnings. If the yields on bond portfolios and corporate loans were to exceed our assumptions by 10bps, 2022 aggregate Bank coverage profit would beat our forecast by 2.9%. We have an OVERWEIGHT sector call with BBL, KBANK, and KKP as our top picks.

2022 coverage earnings should rise 7% YoY, led by lighter LLPs

Our Bank coverage 2022 aggregate earnings forecast is Bt190.7bn, up 7% YoY, supported by lighter LLPs (the mean credit cost peg is expected to fall from 151bps of loans in 2021 to 140bps in 2022), lending growth (we assume 2022 loan growth of 3.6% YoY), and a sustained mean NIM. BBL and TTB will lead the bounce, according to our models, with YoY rises of 15% and 14%, respectively, driven by lighter LLPs (gradual recoveries from COVID-19 effects, supported by BOT measures).