Siam Commercial Bank Q4 profit hit by sharp provision spike

Provisions surged 73% as asset quality deteriorated.

A sharp surge in provisions which rose 73% QoQ weighed in on the Siam Commercial Bank’s year-end earnings performance, according to Maybank Kim Eng.

Also read: The worst is over for Thailand banks

A surge in provisioning cut net income to $223.21m (THB7.08b), 29% below consensus of $314.87m (THB9.99b).

However, Maybank Kim Eng notes that the sharp surge wasn’t due to a major spike in bad loans but can be attributed to the bank’s more vigilant stance amidst the heightened macroeconomic uncertainty.

“The provisioning spike supports our view that asset quality could haunt Thai banks this year, not yet priced in by the market,” analyst Graeme Cunningham said in a report. 

“With our forecasts already considerably below the market’s, premised on lower loan growth and asset-quality deterioration, we only reduce our 2019-20E EPS and TP by 1-2%.”