Thai banks' 4Q13 earnings down 7% to THB47b

See which banks are the sore losers.

According to Maybank Kim Eng, Thai banks posted 4Q13 earnings of THB47b (+50% YoY but -7% QoQ).

Here's more:

Most banks reported net profit in line with our estimates with the exception of KTB. Weaker QoQ earnings were reported by all banks except KTB and KKP, whose QoQ earnings increases were due to lower loan loss provisions than expected for KTB and strong non-interest income for KKP.

NIM improved 4bps QoQ to 3.1%, despite an interest rate cut in Dec 2013, thanks to the successful debt restructuring for corporate loans. Non-interest income rose 5% QoQ due to investment gains of THB4.8b from Vayupak Fund.

Stable asset quality with potential risk from political unrest. We believe most banks became more cautious on the economic outlook, setting higher provisions of 100bps in 4Q13 (+17% QoQ). The NPLs ratio declined 10bps QoQ to 2.9% in 4Q13 due to write- offs, while the coverage ratio increased to 138% from 136% in 3Q13. What’s Our View Weak earnings outlook in 1H14.

We expect sector loan growth of 7.5% vs 10.5% in 2013. NIM should fall 4bps to 3.0%. We expect weak earnings momentum in 1H14 due to prolonged political tensions and high household debt levels, which could affect asset quality in the consumer sector.