kasikornbank
KASIKORNBANK Underperform (17E TP Bt189.00)
Company Update
Close Bt195.50
Banking July 21, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Keep a close watch on asset quality and provision Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
16.630
19.560
KT ZMICO vs. consensus Share data
‐1.9%
‐7.1%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
468.00/13,898.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
207.00/165.50
Avg. daily T/O (shares 000)
7,400.00
NVDR (%)
26.52
Estimated free float (%)
66.5
Beta
1.01
URL
www.kasikornbank.com
CGR
Anti‐corruption
Level 4 (Certified)
Asset quality remains a key challenge We maintain an “Underperform” rating and the 2017E target price as we see that it will still be challenging for KBANK to handle asset quality given continuing system NPL risks for this cycle, mainly from the small SME segment, despite KBANK’s prudent risk management and provisioning. 2Q17 net profit below our forecast and the street estimate by 10% KBANK’s 2Q17 net profit (NP) of Bt8.99bn was below both our forecast and the street estimate (Bt9.9bn) by 10%, due mainly to a larger‐than‐ expected provision. 2Q17 NP stood at Bt8.99bn (‐5% YoY, ‐12% QoQ) The decline in 2Q17 NP both YoY and QoQ was attributable mainly to a much higher provision both YoY and QoQ to 243bps in 2Q17 vs. 210bps in 2Q16 and 215bps in 1Q17. The provision for 1H17 was 226bps vs. the bank’s full‐year target of 220‐225bps for 2017E. Meanwhile, 2Q17 loan growth of 5%YoY and 3%YTD was rather well on track (vs. the bank’s target of 4‐6%). The net interest margin (NIM) stayed flat QoQ at 3.43%, which remained in line with the bank’s target of 3.4‐3.5%. Finally, net fee income expanded by 9%YoY and 1%QoQ while non‐interest income registered growth of 3% both YoY and QoQ. KBANK maintains its 2017 target with the Non NII target a key challenge KBANK has maintained all of its 2017 business targets but it admitted that some targets are rather challenging. In particular, its non‐interest income (Non NII) growth target of
Company Update
Close Bt195.50
Banking July 21, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Keep a close watch on asset quality and provision Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
16.630
19.560
KT ZMICO vs. consensus Share data
‐1.9%
‐7.1%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
468.00/13,898.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
207.00/165.50
Avg. daily T/O (shares 000)
7,400.00
NVDR (%)
26.52
Estimated free float (%)
66.5
Beta
1.01
URL
www.kasikornbank.com
CGR
Anti‐corruption
Level 4 (Certified)
Asset quality remains a key challenge We maintain an “Underperform” rating and the 2017E target price as we see that it will still be challenging for KBANK to handle asset quality given continuing system NPL risks for this cycle, mainly from the small SME segment, despite KBANK’s prudent risk management and provisioning. 2Q17 net profit below our forecast and the street estimate by 10% KBANK’s 2Q17 net profit (NP) of Bt8.99bn was below both our forecast and the street estimate (Bt9.9bn) by 10%, due mainly to a larger‐than‐ expected provision. 2Q17 NP stood at Bt8.99bn (‐5% YoY, ‐12% QoQ) The decline in 2Q17 NP both YoY and QoQ was attributable mainly to a much higher provision both YoY and QoQ to 243bps in 2Q17 vs. 210bps in 2Q16 and 215bps in 1Q17. The provision for 1H17 was 226bps vs. the bank’s full‐year target of 220‐225bps for 2017E. Meanwhile, 2Q17 loan growth of 5%YoY and 3%YTD was rather well on track (vs. the bank’s target of 4‐6%). The net interest margin (NIM) stayed flat QoQ at 3.43%, which remained in line with the bank’s target of 3.4‐3.5%. Finally, net fee income expanded by 9%YoY and 1%QoQ while non‐interest income registered growth of 3% both YoY and QoQ. KBANK maintains its 2017 target with the Non NII target a key challenge KBANK has maintained all of its 2017 business targets but it admitted that some targets are rather challenging. In particular, its non‐interest income (Non NII) growth target of
