Krungthai Bank 4Q14 loan growth solid with 10.8% increase

Thanks to the government and private sector.

Thailand's Krung Thai Bank 4Q14 loan growth was 5.8% QoQ and 10.8% YoY, driven by government and private sector.

According to a research note from Maybank Kim Eng, higher proportion of government lending and strong deposit growth (+13% QoQ) led to the bank's NIM dropping 13bps to 2.75% on higher funding cost (+9bps) and lower asset yield (-4bps). LDR fell to 88.2% from 94.6% in 3Q14.

Meanwhile, non-interest income grew 6% QoQ on expansion of fee income and net trading income. OPEX grew 12% QoQ on marketing expenses in 4Q14. Cost-to-income ratio increased to 44.9% from 42.0% in 2013.

Here's more from Maybank Kim Eng:

KTB reported tax rate of only 14% in 4Q14. We suspect the bank realized some tax benefits from NPL sales same as TMB. At pre-tax level, PPoP fell 6% QoQ and 19% YoY in 4Q14.

Asset quality improved. Gross NPLs dropped THB11b or 17% QoQ, NPLs ratio to decline to 2.96% from 3.75% in 3Q14.

Coverage ratio jumped to 127% (108% in 3Q14), nearly the same level as SCB’s 138% and KBANK’s 141% as at end-2014.

The bank had set aside THB3.7b of provisions or 80bps, 10% below our forecast. Unlike other big banks, KTB will provide the restructured, special mention loan data on audited results in Feb 2015.