Net profit was at a measly THB7.8b.
According to Maybank Kim Eng, BBL’s 3Q12 was disappointing owing to poor loan growth momentum and a squeeze in NIMs. We however still expect net profit growth of 22% this year and a further 21% for FY13F.
Here's more from Maybank:
We maintain our BUY rating, but foresee short-term risks on slowing loan momentum and weak 3Q12 earnings. We thus still prefer KTB for a longer term exposure to the Thai banking sector.
Poor 3Q12 earnings: BBL reported 3Q12 net profit of THB7.8b, down 12% QoQ but up 3% YoY, below our and consensus estimates of THB8.3-8.4b. Net interest income was flat QoQ with loan growth of just 0.6% QoQ (+5.4% YTD), while NIMs contracted 8bps QoQ due to rising funding costs as BBL launched a special deposit campaign to prepare for an expected acceleration in loan demand in 4Q12.
Fee income remains sluggish, with non-NII falling 11% QoQ owing to a lack of dividend income. Opex fell 7% QoQ resulting in a cost-to-income ratio of 43% (2Q12: 45%). Credit cost was normal at THB1.5b. The key drag on earnings this quarter was the 62% QoQ rise in tax expenses, with effective tax rates of 26% in 3Q12 vs. 16% in 2Q12 (BBL’s policy is to accrue high tax rates in 1Q and 3Q and then re-adjust in 2Q and 4Q).
Loan growth momentum slowed in 3Q12: BBL’s loan growth has slowed down in 3Q12 due to a lack of investor confidence owing to uncertainty in the global economy and poor export data in the last few quarters.
However, we believe that loan growth momentum will accelerate in 4Q12, driven by short-term working capital lines. We expect loan growth of 11% for this year, vs. YTD loan growth of 5.4%.
Expect net profit growth of 22% and 21% in FY12-13F: BBL’s 9M12 net profit made up 75% of our full year projection of THB3.5b. We expect 4Q12F earnings at ~THB8.0b from accelerating loan expansion and decreasing tax expenses after the abnormally high rate of 26% in 3Q12.
We expect net profit growth of 21% next year, driven by loan growth of 9.5%, improving fee income and a cut in corporate tax rates to 20%.
Cheap but lacking short-term catalysts: We maintain our positive view of BBL on a strong earnings growth outlook and healthy balance sheet. With valuations still cheap, we maintain our BUY call and THB232 target price. However, we see no share price catalyst in the short term. We prefer to buy BBL on weakness arising from slowing loan growth and weak 3Q12 results. KTB remains our favourite among the big banks.
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