Bangkok Bank profits up 9% to $285.08m in Q1

Core operating revenue also grew across major items.

Bangkok Bank started the year on solid financial footing as net profits rose 9% YoY to $285.08m (Bt9b) in Q1, according to UOB Kay Hian.

“Whilst such healthy earnings growth was supported partially by extraordinary gains booked during the quarter, core operating revenue also expanded across major items,” said analyst Thananchai Jittanoon.

Net interest income growth also clocked in a stable 5% YoY amidst moderate loan growth at 3% in Q1. NIM was also firm at 2.2% over the same period. 

Although NPL balance rose 5.4% QoQ amidst the bank’s relapsed SME performing loans, Jittanoon waved off concerns as total NPL formation has been slowing down since Q4.

Here’s more from UOB Kay Hian: 

Non-interest income (non-II) jumped 32% with support coming from all fronts. Net fee income saw healthy growth of 13% yoy, driven by strong capital market related fees (mutual fund and brokerage, and bancassurance). Investment gains surged 165% (we suspect from bond selling). Other income jumped 224% yoy, supported by one-time gains of Bt549m (revenue share from Bangkok Asset Management). 

 Due to healthy revenue growth, the bank decided to adopt a more prudent provisioning policy with credit hiked to 148bp (1Q17: 121bp, 4Q17: 92bp). As a result, coverage ratio remained relatively high at 159% (4Q17: 160%). Management is still maintaining this year’s credit cost guidance at 90-100bp, implying that provisions could be lower in the upcoming quarters.

To reflect our new assumption on fee income growth (factoring in potential impact from the waiver of digital channel transaction fees via from 2Q18 onwards), we have slightly adjusted our 2018-20 earnings forecasts by 1-2%.