Krung Thai Bank profit balloons 140% to $230.26m in Q2

A sharp decline in provisions, which fell by half, buoyed earnings.

A massive drop in provisions buoyed the earnings of Krung Thai Bank by a whopping 140% YoY to $230.26m (THB 7.7b) in Q2, according to UOB Kay Hian. 

Provisions plunged 51% YoY, pushing credit cost to fall from 289bp in Q2 2017 to 138bp amidst the absence of one-off provisions.

Also read: Thai banks weather digital fee waiver after profits rose 21% $963m in Q2

Non-interest income also rose 5% YoY brought about by higher forex and investment gains.

“Loans grew 1.6% qoq in 2Q18, driven by lending to the retail sector as well as government and state enterprises,” said UOB analyst Thananchai Jittanoon.

“We expect loan growth to continue to gain traction in 2H18 as government investments accelerate. We forecast loan to grow 4% in 2018,” he added.

Here’s more from UOB Kay Hian: 

On a more positive note. While NPLs were slightly up by 3% qoq, overall asset quality has shown encouraging signs of stabilisation as the bank’s NPL formation rate has declined notably while coverage ratio rebounded steadily to 124% in 2Q18 Therefore, we forecast credit cost at 140-150bp in 2018 (2017: 231bp).

Against weak revenue growth, opex rose 5% yoy, driven largely by higher other expense (+36% yoy, mainly from marketing expenses). Overall, operating income before provisions fell 5% yoy.