Big-cap banks lead set surge

Bank of Ayudhya president and CEO Tan Kong Khoon, centre, CFO Janice Rae Van Ekeren, left, and head of corporate communications Yaowalak Poolthong, right, pose for photographers at a press briefing yesterday.

Big-cap banks gained significantly on the bourse yesterday after brokers recommended "buy" on their stock. Their impressive second-quarter earnings were largely behind the SET Index's 3.43-per-cent surge on the day.

Stock analysts said falling oil prices, lower by around 13 per cent since last week, were a good sign pointing to reduced inflationary pressure, while most Asian stocks had rallied on similar factors.

Locally, analysts said banking stocks led the market as investors bought big-cap stocks on the back of their second-quarter results. In addition, foreign net selling yesterday was as low as Bt436.98 million, compared to total net selling of more than Bt80 billion in the year to date.

The SET Index closed up 3.43 per cent at 687.3 points, with the banking index surging 4.2 per cent.

Bangkok Bank (BBL) led gains among the four biggest lenders, after Citigroup raised its ratings on four banks from "sell" to "buy" citing attractive valuations. Citigroup upgraded BBL, Kasikornbank, Siam Commercial Bank and Krung Thai Bank.

BBL closed at Bt106, up 5 per cent, its biggest increase in almost a month. The bank has fallen 13 per cent this year, compared with a 21-per-cent decline in the SET Index.

The bank reported a year-on-year second-quarter drop in net income of 5.8 per cent to Bt5.03 billion. Siam Commercial Bank (SCB), the third-largest bank by assets, recorded an impressive net profit for the second quarter of Bt5.82 billion, a jump of 35 per cent, thanks to an increase in both interest and non-interest income.

SCB rose 3.47 per cent to close at Bt74.5, while fourth-ranked lender Kasikornbank jumped 6.3 per cent to Bt67.5.

Kasikornbank said earlier its second-quarter net income rose 4.4 per cent from a year earlier to Bt4.27 billion as loan demand and net interest income increased. The bank's earnings have exceeded analysts' forecasts.

State-owned Krung Thai Bank, the No-2 lender, rose 1.97 per cent to close at Bt7.75.

"Valuations of the big-cap Thai banks have fallen to near their lows, making the risk-reward of remaining sellers unfavourable," Robert Kong, a Singapore-based analyst at Citigroup, said in a research note released yesterday.

Kong said loan growth remained robust and fee income was increasing.

Bank of Ayudhya rose 4.5 per cent to Bt18.60 yesterday. The lender reported net profit of Bt2 billion in the quarter ending June 30, compared with a loss of Bt8.95 billion a year earlier, as profit from its personal finance business increased and loan-loss provisions fell. The nation's fifth-largest bank tallied Bt3 billion of net profit in the first half, while its profit before provisioning and tax was Bt6.4 billion - 61-per-cent growth compared to the same period last year.

Meanwhile, its net interest margin is targeted to reach 4.2 per cent at year-end, from 3.98 per cent currently 3.63 per cent in the first half of last year.

The stock price of Siam City Bank, the state-controlled lender, added 3.7 per cent to Bt14, its steepest climb since June 25.

The bank's net income surged to Bt685 million in the second quarter from Bt354.1 million a year earlier, as it set aside less money for loan-losses, according to a filing to the stock exchange.

SCB Securities has maintained "buy" for TMB Bank, the country's sixth-largest bank, with a target price of Bt1.40, saying a strong earnings turnaround in 2008 reflects resumption of normal operations, a new management team and synergy with its new major shareholder, ING Group - all of this contributing to the share price.

Lower loss provisioning has pushed TMB's net profit up 106 per cent year on year to Bt1.16 billion from a net loss of Bt18 billion in the same period last year. TMB shares rose 2.75 per cent to close at Bt1.12 yesterday.