Kasikornbank non-NII climbs 6% QoQ, 16% YoY

Thanks partly to strong investment gain.

Thailand-based Kasikornbank's non-net interest income (non-NII) rose strongly, with a 6% QoQ increase in 3Q14, and 16% growth YoY from strong fee income and investment gain.

According to a research note from Nomura, meanwhile, net fee increased by 10% q-q, 21% y-y, from credit, guarantee products, sales of mutual funds and brokerage business.

Nomura said it expects higher fee income in 4Q14F due to seasonality.

Here's more from Nomura:

3Q14 results beat our/consensus estimates. KBANK reported 3Q14 net profits of THB12.5bn (+6.7% q-q, 16.8% y-y), supported largely by strong fee income and investment gain in the quarter.

9M14 earnings were 79% of our full-year profit estimates, indicating strong upside risk in profit.

Loan growth on track; marginally wider NIM from lower funding cost. Loan growth was on track to meet its 8% target and our 7.7% estimate, with YTD-9M14 growth of 4.3%.

We expect seasonal credit demand from all segment, especially SMEs and retail (housing loans), to rise in 4Q14. NIM improved marginally (+3bps q-q) from lower funding cost, but could decline moderately due deposit competition in 4Q14F.

Asset quality dipped slightly but intact. NPLs rose 3% q-q. We assume this was mainly from the SME and retail segment.

But overall asset quality remained strong with NPL ratio still low at 2.16% vs. its target of 2.2%. Credit cost rose moderately to 98bps from 82bps in 2Q14, as hinted by KBANK.

KBANK remains one of our top picks. We expect KBANK’s strong performance to continue into 4Q14F and 2015F. We also anticipate housing loans to lead growth in the retail segment, while

SME loans should gradually expand. Our TP of THB265 implies 2.1x FY15F BV.