Equity Analysis /

Thailand (Bualuang): Bank - Recovery in view

  • KTB and TMB to post the best 4Q20 earnings performances

  • Bottom-line recoveries in 2021; KBANK and BBL to do best

  • Dividends unlocked; SCB, BBL, & TISCO are our top picks

Bualuang Securities
15 January 2021

The banks are in recovery mode. Our coverage will report an aggregate profit dive for 4Q20, but the number will be up QoQ. And we expect Bank coverage 2021 earnings to jump 22% YoY, supported by lighter LLPs, higher fee & service income, and loan growth. In the interim, some Banks will pay very generous dividend yields for 2020. Hence, our sector call is OVERWEIGHT. BBL, TISCO, and SCB are our top picks.

KTB and TMB to post the best 4Q20 earnings performances

We expect the eight banks under coverage to report an aggregate 4Q20 profit of Bt32.2bn, down 22% YoY, due to heavier LLPs and lower fee & service income (tourism and other activity have dived YoY, due to COVID-19). But that number represents an 11% QoQ rise, as we assume lighter QoQ LLPs (earlier pre-emptive debt-restructuring should ease 4Q20 LLP requirements) and modest corporate and SME loan growth. Among the banks, KTB, BBL, SCB, and TMB look set to post QoQ earnings growth for the quarter of 87%, 45%, 26%, and 10%, respectively, buoyed by lighter LLPs and modest loan growth. In contrast, we expect KBANK, TISCO, BAY, and KKP to mark QoQ profit declines of 20%, 18%, 18% and 2%, respectively, due to heavier LLPs (note that KBANK will also mark much heavier QoQ OPEX).