Bangkok Bank

Q4 2012 results in line with estimates

Bangkok Bank Plc (BBL)

Profit as expected

BBL announced 4Q12 earnings of Bt8.3bn, up by 40% YoY and 6% QoQ. The result was in line with our number, but was 2% above the Bloomberg consensus. The bank's 4Q12 pre-provision operating profit was Bt10.3bn, up 9% YoY but down 9% QoQ. Reported FY12 earnings jumped 21% YoY to Bt33.0bn, which was in line with our projection.

Results highlights

4Q12 lending expanded by 3.5% QoQ and 9.1% YoY to Bt1.61trn at YE12, driven by the SME and corporate portfolios. 4Q12 deposit mobilization far outpaced lending growth, up by 3.3% QoQ and 15.5% YoY. Hence, NIM declined 13 bps QoQ to 2.48%, as expected. 4Q12 fee income jumped by 16% YoY and 4% QoQ to Bt6.2bn (in line with our estimate). OPEX was Bt10.3bn, down 3% YoY (but up 13% QoQ). Given a slimmer NIM and higher OPEX, the bank's cost/income ratio rose to 50.0% in 4Q12 from 44.7% in 3Q12.

BBL set loan loss provisions of Bt2.5bn for the quarter, down 64% YoY (but up 63% QoQ). The NPLs/loans ratio declined further to 2.3% at YE12 from 2.6% at end-September, while the loan loss coverage ratio rose to 206.9% at YE12 from 191.8% at end-September.

Outlook

We anticipate stronger QoQ lending growth in 1Q13 on seasonality, led by the corporate and SME categories. We expect BBL's corporate tax rate at 20percent for 1Q13, down from 25percent for the corresponding period last year.

What's changed?

Our FY13 and FY14 earnings projections stand unchanged at Bt40bn and Bt47bn, respectively.

Recommendation

BBL's risk profile is the most resilient to economic uncertainty of the banks under our coverage. There is scope for upside to our earnings forecast from

fee income expansion, lower loan loss provisions and OPEX management than modeled. BBL currently trades at an inexpensive YE13 PBV of 1.3x against a regional mean of 1.8x. BUY!