Krung Thai Bank must brace for a tough quarter ahead: analysts

Net interest income will decline 4.5%.

Analysts at Maybank Kim Eng says this quarter will be tough for KTB. Loans will be flat from the previous quarter but due to lower NIM, net interest income will decline 4.5%. Non-interest income will also be lower from the higher base last quarter (due to extra gains in FX-related transactions).

With 1.0% increase in operating expenses, preprovision operating profit is projected to fall by 10.5%. With regard to credit quality, NPLs will surge to THB90b, a THB22.5b rise from 2Q15, mainly due to SSI loan reclassification. 

"We expect KTB to set aside THB9.3b of provision this quarter (or 47bps of credit cost). On top of the THB6b for SSI, THB2.1b is for normal provision and the THB1.2b comes from its subsidiaries. All in all, net profit is projected to be THB5b, falling 40% QoQ. Not only for this quarter, KTB is likely to increase coverage ratio going forward, putting pressure on ROEs in the next few years," adds Maybank Kim Eng.