But NPLs now comprise 3.7% of total loans.
According to UOB Kay Hian, Bangkok Banks' operating profit rose 24% yoy, underpinned by broad-based revenue expansion and good opex control. NPLs continued to rise but overall coverage ratio remained respectable at 151%.
Here's more from UOB Kay Hian:
Earnings up 12% yoy. Bangkok Bank (BBL) posted a net profit of Bt8.0b (US$240m), up 12% yoy. Core operating revenues expanded across all key items while opex was well controlled. Operating profit before provisions rose 24% yoy.
Healthy top-line. Net interest income growth was healthy at 6%, supported by more respectable loan growth of nearly 3% qoq (driven by working capital loan demand from large corporates, SME). NIM was firm at 2.2%.
Strong non-II. Non-interest income shot up 24%, underpinned by a strong rebound in investment gains and healthy fee income growth. With the absence of last year’s one-off investment loss, investment gains rebounded strongly to Bt1.6b (2Q16: Bt51m). Net fee also grew healthily by 7%, boosted by mutual fund, bancassurance and loan-related fees.
Well-managed opex. Opex rose 2% yoy. Overall, operating profit grew jumped 24% yoy.
NPLs still up. On a less positive note, credit costs were kept high at around 115bp vs the normalised level of 70-80bp. This was to cushion against a further increase in NPLs which rose 10% qoq to Bt85.9b or 3.7% of total loans. Coverage ratio dropped to 151% (1Q17: 160%). There was no clarification from the bank relating to the source of the new NPLs. However, we suspect the NPLs could be coming from SMEs in the agricultural and manufacturing sectors.
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