Bangkok Bank’s net profit surged 21% in 2012

But will it continue its momentum this year?

According to Maybank Kim Eng, BBL reported net profit is in line-with-expected 4Q12 earnings of Bt8.3bn. Overall; the 2012 net profit grew 21%, while it expects a further 21% growth this year. “It is still positive on the BBL strong earnings growth outlook and healthy balance sheet, while the share price still lags and trades at a very deep discount compared to the sector. BBL should be able to outperform this year, and we expect a 10% return from the valuation gap.”

Maybank rates this a BUY with a Bt232 target price.

Here’s more:

Inline 4Q12 results. BBL reported a 4Q12 net profit of Bt8.3bn, up 6% QoQ and 40% YoY, inline with our and consensus estimates. Loans expanded well 3.5% QoQ (+9.1% full year) recovering from poor momentum in 3Q12. Corporate and SME loans were key items on seasonal demand. The NIM dropped 14 bps QoQ to 2.35% from the interest rate cut in October and rising funding costs from a special deposit campaign.

Fee income grew well 6% QoQ and Opex rose strongly on seasonality, resulting in a 49% cost-to-income ratio, jumping from 43% in 3Q12. With a conservative and prudent policy, credit costs increased to Bt2.5bn, vs. Bt1.6-1.7bn at a normal level, despite continuing decreases in NPLs. A key growth driver for earnings this quarter was a low tax rate of just 1%, vs. 26% in the prior quarter.

This came about from higher taxdeductible items from transferring the general reserve to the specific reserve. Overall, the 2012 net profit grew 21%YoY.