Bangkok Bank Public Company Limited (BBL) yesterday (April 20) reported a net profit of 6,923 million baht in 1Q21, decreased 9.74% from a net profit of 7,670 million baht in 1Q20, mainly due to increases in expected credit losses to cushion the impact of the Covid-19 outbreak, and operating expenses due to the consolidation of Permata’s expenses. Non-interest income increased from higher gains on financial instruments measured at FVTPL, in line with the market situation.
Following BBL’s operating results, 3 securities including Krungsri Securities, KTBST Securities and Phillip Securities have released an analysis for BBL’s earnings outlook with a consensus to maintain a “BUY” recommendation, but different target price giving.
Krungsri Securities (KSS) stated that BBL’s 1Q21 earnings were 73% higher than its estimation. The key positive surprise was lower-than-expected OPEX, which fell 22% qoq to 15.7 billion baht. C/I ratio improved sharply to 51%, albeit still higher than the L-T average of mid-40%. But that is much lower than the 66% registered in 2H20, in the absence of Permata branch integration costs and spending on IT infrastructure.
Even though the latest outbreak could disrupt economic recovery and prompt BBL to increase loan loss reserve to cushion risks in 2Q21. However, that would be a temporary hiccup. ECL should continue to normalize and remain the key earnings driver at least into 2022. KSS maintained a “BUY” rating for BBL with a target price of ฿155.00/share.
KTBST Securities (KTBST) reiterated a “BUY” rating on BBL but raise the target price to ฿160.00/share from ฿150.00/share, while maintaining 2021E PBV at 0.65x (-1.5 SD below its 10-yr average), as KTBST upgraded its 2021E earnings forecast to reflect strong 1Q21 performance. BBL’s operating results in 1Q21 have beat Bloomberg consensus and KTBST forecast by 35% and 26% due to higher-than-expected fee-based income and lower expense (a lack of expense for Permata).
KTBST raised the 2021E/22E net profit forecast by 12-14% to 26 billion baht, which indicates a strong growth of +50% YoY, as it revised up its fee-based income estimate. In the near term, KTBST forecasted 2Q21E net profit to grow at a rapid pace YoY in the expectation that loan-loss provision may decline further.
Meanwhile Phillip Securities (PS) said that despite BBL’s 1Q21 net profit was lower than its expectation, PS maintained its full-year earnings forecast and target price at ฿141.00/share. The level of expected credit losses is expected and BBL will gain a benefit from Permata’s operations. Still, giving a “BUY” recommendation on BBL