Krungsri's net profit likely to have increased 2.5% in 1Q16

It's a rare feat for Thai banks.

Maybank Kim Eng expects decent 1Q16 results from BAY, scheduled for 20 Apr. Due to solid operating performance, net profit is likely to have expanded in both YoY and QoQ terms, which is something only a few banks may achieve this quarter.

Here's more from Maybank Kim Eng:

Operating profit to improve
Loans may have declined by 0.6% due to repayments from some corporate clients, which normally happens in 1Q16. However, loan growth in SME and retail segments is likely to have remained good.

Although we expect a slightly weakened net interest margin, we anticipate a 0.5% increase in net interest income thanks to the larger contraction in deposit base. We expect solid growth in non-interest income, rising 1.7% QoQ, partially supported by gains from FX trading and investments.

Operating expenses are likely to have grown by 6.7% owing to seasonality. As a result, we expect a 6.7% QoQ increase in operating profit.

NPLs and provisions should gradually rise
In line with the industry, we expect a 13bps rise in NPL ratio to 2.6% due to the weakness in the SME and personal loans segments. Thus, we expect BAY to set aside THB5.2b of provisions this quarter, a 7% increase from the previous quarter.

In conclusion, net profit is likely to have accelerated by 2.5% QoQ or 21% YoY.