Equity Analysis /

Thailand (Bualuang): Bank - Recovery to continue through 2022

  • 3Q21 coverage earnings should rise YoY but dive QoQ

  • 4Q21 coverage profit should rise YoY and QoQ

  • 2022 coverage earnings should rise 6% YoY on lighter LLPs

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
17 September 2021

We forecast 3Q21 Bank coverage aggregate earnings of Bt34.5bn, up 19% YoY but down 31% QoQ. Our models also point to aggregate profits of Bt169bn for 2021 (up 25% YoY) and Bt180bn for 2022 (up 6% YoY) driven by lighter LLPs, fair loan growth, and higher non-NII. We have an OVERWEIGHT sector call. TISCO, BBL, KBANK, and KKP are our top picks. The investment horizon rolls over to YE22.

3Q21 coverage earnings should rise YoY but dive QoQ

Our models point to the eight banks under our coverage posting aggregate 3Q21 earnings of Bt34.5bn, up 19% YoY, supported by lighter LLPs (the mean credit cost peg is assumed to fall from 186bps of loans in 3Q20 to 168bps in 3Q21) and lending growth. SCB and BBL will lead profit expansion, according to our forecasts, with YoY rises of 62% and 44%, respectively. In contrast, we expect BAY to mark the deepest YoY bottom-line dive of 30%.

In QoQ terms, aggregate profit looks set to dive 31% QoQ, due to heavier LLPs (the govt imposed a hard lockdown in July 2021 in order to try to bring the third COVID-19 outbreak under control) and because BAY’s earnings will slump (in 2Q21 BAY marked a big extra gain from selling shares in Ngern Tid Lor Plc into its IPO).