Thailand-based KrungThai Card's 4Q14 net profit surges 86% YoY

The company's operations were solid.

Thailand-based KrungThai Card's 4Q14 net profit jumped 86% YoY to THB425m, in line with Maybank Kim Eng's forecast but beating consensus by 10%.

According to a research note from Maybank Kim Eng, meanwhile, FY14 core EPS grew 69% to THB6.8.

Further, the report noted that the company had strong operations, as expected. FY14 net interest income was up 14% YoY on better loan growth and credit card spending. 4Q14 loans grew 6.3% QoQ and 7.4% YoY due to seasonality.

Also, credit card spending grew 7.4% vs industry’s growth of 9.4% in 2014. NIM improved 74bps to 13.7% in 2014 on higher proportion of personal loans of 30% (29% in 2013) and lower funding cost.

Here's more from Maybank Kim Eng:

FY14 non-interest income increased 7% YoY, thanks to strong fees on credit card spending and bad debt recovery. In sum, KTC reported core earnings of THB1.75b, up 69% YoY.

Better asset quality. Although KTC has increased the portion of its high yield personal loan portfolio, its gross NPLs fell 3.5% QoQ to THB1.34b or 2.44% of total loans on the efficient debt collection service. NPL coverage rose to 364% in 4Q14 from 340% in 3Q14.

Raise FY15F earnings by 11%; Reiterate BUY TP THB100. We lower credit cost assumption to 8.95% from 9.35% in 2015 due to the huge provision against the better asset quality outlook.

Our FY15F earnings forecast is higher than the market’s as we believe the current provisions are enough for any uncertainty. We expect KTC’s earnings to grow 26% to THB2.2b in 2015. Maintain BUY with Street-high TP of THB100.