KGI Securities (Thailand) maintains its ‘Hold’ recommendation on Bangkok Bank Public Company Limited (SET: BBL) with a target price of 170 baht per share, following the announcement of 1Q25 net profit of 12.6 billion baht (+21% QoQ, +20% YoY), which beat both the analyst’s and the consensus estimates by 11% due to strong investment gains.
However, overall operating performance showed signs of vulnerability from several factors: 1) shrinking net interest margin (NIM) put pressure on net interest income (NII), 2) asset quality became more volatile, especially in the manufacturing sector, and 3) depreciation of the Indonesian rupiah led to foreign exchange losses, forcing the bank to rely on trading income to offset this volatility. Against the backdrop of a fragile economy, BBL’s operations may prove more sensitive than its peers.
Similarly, Kasikorn Securities (KS) observed that BBL’s net profit rose both QoQ and YoY, mainly thanks to better-than-expected investment gains, even as interest income declined due to a weaker NIM amid lower policy rates. Although pre-provision operating profit (PPOP) was softer than expected, fees and non-NII stayed resilient. Nevertheless, non-performing loans (NPLs) climbed to 3.6% and the coverage ratio weakened, highlighting ongoing asset quality concerns despite strong earnings.
Meanwhile, Trinity Securities gives a ‘Buy’ recommendation on BBL, noting the 1Q25 profit of 12.61 billion baht, up 21% QoQ and 20% YoY, and exceeding expectations by 11%. This was driven by a 27% jump in non-interest income, primarily from investment profits as bond prices rose amid declining interest rates, along with an 8% uptick in fee income led by insurance and mutual fund products. Seasonal factors also contributed to a 13% reduction in operating expenses.
However, net interest income dropped 6% due to lower lending rates and repayments of revolving loans, resulting in a 27 basis points decline in NIM. Provisions rose by 19% to cover geopolitical risks, and NPLs grew from 2.7% to 3.0%, largely due to restructured loans re-entering NPL status, for which reserves are in place.
Full-year 2025 profit is projected at 46.79 billion baht, up 3% from last year. With the stock trading at 0.5x PBV—below the target price of 185 baht (PBV 0.62x)—and offering an 2H24 dividend of 6.5 baht per share (4.4% residual yield, 6% annual yield), BBL remains attractively valued.
