Commercial banks are expected to show combined earnings of Bt24 billion to Bt27 billion in the second quarter, a 3.1 to 4.1 per cent drop from the previous quarter but an increase of 11.6 to 25.9 per cent from the same period last year, Kasikorn Research Centre has forecast.
In the first quarter, the banks showed a 28 per cent quarter on quarter growth and 18.1 per cent yearonyear growth.
While combined interest and noninterest income is expected to drop to Bt94.8 billion to Bt96.5 billion, from Bt96.2 billion in the first quarter, net interest margin (NIM) in the second quarter is expected to fall in the range of 3.35-3.39 percentage points, down 610 basis points from the previous quarter.
DBS Vickers Securities (Thailand) estimates that local banks will post impressive earnings growth of 16.4 per cent this year, showing a 6per cent loan growth, 19 basis points expansion in NIM, 18per cent increase in fee income and lower credit cost of 79 basis points from the previous year.
Bangkok Bank (BBL) and Kasikornbank (Kbank) are its top picks.
"We like KBANK for its good asset quality, lowest NPL ratio and highest fee income growth among peers, and BBL for its strong balance sheet, highest NPL coverage ratio and attractive valuation. Following Thailand's economic recovery, we believe KBANK and BBL will beneŽfit from stronger loan demand by corporates and SMEs in 2010."
According to the forecasts of Tisco Securities and DBS, BBL is expected to show the highest quarterly results. While Tisco anticipates Bt5.6 billion for the bank, which contracted 7 per cent from the previous quarter but expanded 16 per cent on year, DBS expects BBL to show quarterly earning of Bt6.65 billion.
DBS also believes BBL will benefit from the recovering economy, higher commodity prices, bigger government expenditure and the stimulus package, which are driving demand for working capital loans by corporate and SME clients. These have already accounted for 42 per cent and 28 per cent of BBL's total loans respectively, especially from contractors and agri business segments. In addition, until May 10, BBL's loans grew 2.9 per cent led by longterm loans by corporates in line with its internal loan growth target of 5 to 6 per cent in 2010.
"The quarterly results of Bt6.65 billion, up 10 per cent from the preŽvious quarter, include the onetime gain of Bt2 billion from the sale of ACL Bank shares," it said.
It forecast strong loan growth of 6 per cent for the second quarter, while the NIM is expected to widen to 2.9 per cent and loanloss provision is maintained at Bt2 billion.
BBL is also a top pick of Bualuang Securities as its share price has underperformed compared to its domestic and regional peers. At the price of Bt128, the upside gain is huge with the end2010 target price of Bt150.
Meanwhile, Bualuang expects the bank to post a second quarter net profit of Bt6.8 billion, up 13 per cent on quarter and 40 per cent on year. BBL is expected to witness a 2.9 per cent loan growth in the first half, with a strong growth in the latter half. While provisions are as high as 117 per cent of non-performing loans as of March and slight impacts from the political turmoil in the second quarter, provisions for the second quarter should be only Bt1.7 billion, down 17.1 per cent on quarter and 16.5 per cent on year.