Bangkok Bank trumps forecasts with 6% QoQ earnings growth in 3Q14

Thanks to large investment gain of THB2.5b.

Thailand-based Bangkok Bank's 3Q14 earnings grew 6% QoQ and 7% YoY to THB9.6b (EPS:

THB5.02), beating Maybank Kim Eng's and market forecasts by 7-8% on large investment gain of THB2.5b.

According to a research note from Maybank Kim Eng, meanwhile, net interest income was flat QoQ despite negative loan growth of 1% as strong NIM (+3bps QoQ) has more than offset the weak loan demand.

Non-interest income grew 18% QoQ mainly due to a large investment gain of THB2.5b vs THB500-550m in 2Q14 and 3Q13.

Here’s more from Maybank Kim Eng:

However, trading income and FX-related fees fell 14% to THB1.2b due to weak export/import activities.

OPEX fell 3% QoQ to THB10.6b, higher than our forecast. Normally OPEX drops in 3Q and peaks in 4Q.

Cost-to-income ratio decreased to 41% from 45% in 2Q14, thanks to strong top line.

Asset quality remains solid. The bank used the investment gain to offset the higher credit cost of 76bps (vs our estimates of 52bps).

Coverage ratio fell to 198% from 216% in 2Q14 due to a high NPL inflow and write off.

In sum, 9M14 PPoP and earnings accounted for 77-78% of our full-year forecast.