-4Q13A in line with expectations. 4Q13A net profit fell 7% YoY and 14% QoQ to Bt7.69bn, in line with our forecast. 4Q13A results showed accelerating loan growth, QoQ narrowing in NIM, small QoQ fall in non-NII and a slight improvement in asset quality. Key points:
1. Loan growth: Better than expected at 4% QoQ and 9.2% YoY, beating our forecast of 8%, mainly driven by corporate and SME loans.
2. Net interest margin: As expected, -10 bps QoQ to 2.23%. Yield on earning assets fell 2 bps QoQ as a result of an interest rate cut. Cost of funds rose 10 bps QoQ from aggressive fund raising via a deposit campaign.
3. Non-interest income: As expected, -2% QoQ, mainly due to a QoQ fall in fee income.
4. Cost to income ratio: Seasonally up to 49.7% from 44.8% in 2Q13 as a result of marketing expenses.
5. Asset quality: NPLs by amount declined 7.3% QoQ, bringing NPL ratio down to 2.47% from 2.77% at 3Q13. Provisions were stable QoQ. Loan loss reserve (LLR) coverage surged to 214% from 201% at 3Q13, the sector’s highest.
Maintain buy. We maintain BBL as the sector’s top buy with a minimal hike in TP to Bt228 (1.45x 2014F BVPS). BBL is the bank with best cushion to handle the rising uncertainty from political unrest as it has the strongest balance sheet on all fronts – capital funds, LLR coverage and liquidity.