KrungThai Card 1Q15 earnings jump 62% YoY to THB574m

Thanks partly to strong Non-NII growth.

It has been noted that KrungThai Card's 1Q15 earnings surged 62% YoY to THB574m, due to strong
Non-NII growth, improving asset quality w/ lower provisions.

According to a research note from Maybank Kim Eng, the company has impressive earnings in 1Q15.

Net interest income grew 9% YoY, supported by 8% YoY loan growth and 14bps increase in NIM. Loans fell 3% QoQ on seasonality effect.

Non-interest income grew 13% YoY, thanks to strong fees on credit card spending (+10%) and bad debt recovery (+16%). OPEX grew 15% YoY on personnel expenses.

Here's more from Maybank Kim Eng:

KTC had set aside provisions of THB1.1b in 1Q15, down 9% YoY and 18% QoQ due to the current strong loan loss reserve. 1Q15 net profit jumped 62% YoY and 35% QoQ to THB574m, 25% of our FY15 full-year net profit.

We expect asset quality to improve slightly from 2.44% NPLs ratio and 364% NPL coverage in 4Q14. Note that KTC will announce loan loss reserve and NPLs in mid-May.

Expect lower credit cost and higher NIM in 2015. KTC will rollover its debentures of THB4.2b in 2H15 and THB5.2b in 2016.

We expect the company to issue the debentures at the lower interest rate of 4.0% from 4.65-6.0% now given the recent policy rate cut and its credit rating being upgraded to A- from BBB+.

We also lower credit cost to 8.85% in FY15 and 8.50% in FY16 due to the huge provision. After fine-tuning assumptions, we raise FY15-16 earnings by 3-7%.

We expect earnings to grow 30% this year and 19% next. We believe the consensus to upgrade KTC’s earnings in 3 months.