But total net gains of banking industry in 2013 will increase 24.2 % year on year
Listed commercial banks are expected to record the lowest quarterly net profit of 2013 for the final three months of the year because of higher expenses. However, total net profits of the banking industry for 2013 will be Bt182 billion, a 24.2-per-cent increase year on year. According to Krungsri Securities, net profits of nine listed banks in the fourth quarter of 2013 are expected to total Bt40.9 billion, down 13.3 per cent from the previous quarter due, mainly because of high loan-loss provisions. This quarterly profit figure will be the lowest of the year for the banking sector.
Krungthai Bank was expected to set extra provisions in the last quarter of 2013.Siam Commercial Bank is expected to post the highest profit of the quarter at Bt12.08 billion, followed by Kasikornbank at Bt8.88 billion and Bangkok Bank at Bt8.09 billion.
Year on year, net profits of the banking sector in the fourth quarter grew by 48.7 per cent thanks to rising interest income due to lending expansion, increased fee income and revenue from insurance businesses, and increased revenue from investments.
For example, KTB, SCB and Thanachart Capital will realise revenue from selling investment units in the Vayupak fund with total worth of more than Bt4 billion.
It is expected that fourth-quarter lending will post growth of 2.7 per cent from the previous quarter because the final three months of the year are the high-spending season, and also see demand for trade finance. Loan growth was expected to reach the projected 2013 target of 10.4 per cent.
Non-performing loans could be up slightly, as the personal and small-business loan segments are both sensitive to economic fragility. However, the NPL rate is under control at 3 per cent, while the higher loan-loss provisions in the fourth quarter drove the coverage ratio to 136 per cent.
Even though the political unrest has pressured banking stocks, in terms of valuation, this sector is still attractive for investors, according to Krungsri Securities.
The brokerage predicted slower net-profit growth for the banking sector this year, at 8.4 per cent compared with 24.2 per cent in 2013. Also, it notes that bank profits could be pulled down further if the political turbulence is prolonged and is a drag on spending and investment.
Estimated net profits in the fourth quarter of 2013 and fiscal year 2013 of the banking sector.
Q4-12 Q4-13 2012 2013
BBL 7.42 bn 8.09 bn 33.02 bn 36.31
KBank 7.69 bn 8.88 bn 35.26 bn 40.68
KKP 1.07 bn 909m 3.39 bn 4.3 bn
KTB 719m 6.48 bn 23.52 bn 30.39 bn
LHBank 198m 184m 683m 850m
SCB 9.3 bn 12.08 bn 40.22 bn 50.56 bn
TCAP 1.7 bn 1.61 bn 5.48 bn 9.12 bn
TISCO 996m 919m 3.7 bn 4.36 bn
TMB -1.6 bn 1.7 bn 1.6 bn 5.8 bn
Source: Krungsri Securities