RETAIL BANKING | Staff Reporter, Thailand

Big thai banks to suffer weak FY17F results

No thanks to higher provision expenses and lower non-interest income.

Big Thai banks are expected to report weak FY17F results, DBS Group Research reports. The earnings contraction in FY17F is due to higher provision expenses and lower non-interest income. All small banks, however, are expected to report decent profit growth.

Here's more from DBS Research:

Bangkok Bank is expected to post the strongest pre-provision operating profit (PPOP) growth (+10% y-o-y), driven by decent top-line growth and lower cost-to-income ratio, while TISCO is expected to report the strongest net profit growth (+22% y-o-y), driven largely by stronger top-line growth and lower provision expenses.

The eight banks under our coverage (Bangkok Bank, Kasikornbank, Krung Thai Bank, Kiatnakin Bank, Siam Commercial Bank, Thanachart Capital, TMB Bank PLC, and TISCO Financial) should post an aggregate net profit of Bt42.5bn (-6% y-o-y; +4% q-o-q) in 4Q17F.

The y-o-y weakness should be due to higher provision expenses (+17% y-o-y), despite stronger PPOP; meanwhile, the q-o-q improvement should be driven largely by lower provision expenses (-20% q-o-q). Amongst the eight, Bangkok Bank, Thanachart Capital, and TMB Bank PCL are expected to post both y-o-y and q-o-q earnings growth in 4Q17F, whilst Kasikornbank and Kiatnakin Bank are expected to see both y-o-y and q-o-q earnings declines in the quarter.

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