Analysts raised their earnings forecast for Bangkok Bank Plc. (SET: BBL) in 2022 to THB35.9 billion, or a 35% YoY increase, following an analyst meeting with BBL’s executive team. Chartsiri Sophonpanich, President of BBL, revealed that the company targets 4-6% loan growth and lower provisions as it sees strong demand for corporate loans on the back of public infrastructure investment and relocation of manufacturing bases from China to ASEAN region. Recommend “BUY” with a target price of THB165.00.
BBL held an analyst meeting on February 3 to unveil its business plan, setting a 2022 loan growth target of 4-6%. Large businesses would grow by 4-6%, while large and medium SME loans would rise by 3% and 1%, respectively. Retail loan growth would be 4-6%, whereas foreign loan growth would be 4-6%. The target for loan loss provisions is set at THB26.0 billion. Additionally, the bank established a goal ROE of 10% (4% in 9M21) for the next 3-5 years, and aims to further reduce operational costs after reducing the cost to income ratio to 53.6% in 9M21 from 62.4% in 2019. Additionally, the bank established a goal ROE of 10% (4% in 9M21) for the next 3-5 years, and aims to further reduce operational costs after reducing the cost to income ratio to 53.6% in 9M21 from 62.4 % in 2019.
The moratorium loan represents 11% of the total, down from 14% in 2H21, when the program ended two months ago. An increase in bond yield would benefit NIM and the bank’s loan growth, as a higher bond price would encourage clients to take out further loans. Also, BBL stated that the digital asset is in development and that additional details are available later.
Maybank Securities (Thailand) (MST) is positive on BBL’s prospects for strong corporate loan growth and lower credit cost in 2022. BBL should benefit from the strong loan demand related to infrastructure investment and overseas expansion by Thai corporates as it focuses on lending to large corporates and overseas (65% of loans). MST is also comfortable with its asset quality given high NPL coverage of 226% in 2021. MST raised BBL’s 2022-23 earnings rise by 3-4% to reflect strong NII growth. Recommend “BUY” with a higher target price of THB165.00 (0.6x FY22E P/BV, 7.7%ROE).
Krungsri Securities (KSS) raised BBL’s 2022 earnings by 10% after adjusting for better-than-expected targets for loan growth and provisions. BBL is expected to enjoy solid loan book expansion as a result of a demand for corporate loans on the back of encouraging economic recovery, investments in new S-curve businesses, relocation of manufacturing bases to ASEAN region, and public infrastructure investment. Given a total upside of more than 15% towards its revised target price and projected strong earnings growth, KSS upgraded BBL to BUY (from Hold) with revised target price of THB154.00 (based on 0.57x PBV).
Meanwhile, KTBST Securities (KTBST) had a neutral view of the guidance, most of which was in line with its assumptions. Although the bank’s loan-loss provision target was THB26.0 billion, which was well below its assumption of THB34.0 billion. As for Bank Permata Indonesia, the bank will continue to cut costs after the cost to income reduced to 53.6% in 9M21 compared with 62.4% in 2019. KTBST kept the 2022 net profit forecast unchanged at THB28.0 billion, representing a 5% increase, in expectation of lower loan-loss provision amid higher fee-based income, as well as a gain on investment. In 1Q22, KTBST expects net profit to grow both YoY, QoQ on lower provision. Recommend “BUY” with a target price of THB146.00, which is pegged to 2022E PBV of 0.57x or -1.5 SD below its 10-yr average.
