Kiatnakin Bank's 4Q13 loan growth up a measly 1.8%

Management cautious on growing auto loans.

According to Maybank Kim Eng, Kiatnakin Bank's 4Q13 loan growth was 1.8% QoQ compared to 3.4% average growth in 9M13 as KKP was more cautious on growing auto loans given asset quality deterioration.

4Q13 NIM dropped 10bps QoQ to 3.64% due to lower asset yield. PPOP grew 13% QoQ, thanks to strong growth in non-interest income.

Here's more:

Weakening asset quality

KKP set aside provisions of THB553m in 4Q13, equivalent to 1.25% of total loans. NPLs grew 13% QoQ to THB7.3b. Hence, the NPLs ratio increased 37bps QoQ to 3.8%, while the coverage ratio fell to 100% in 4Q13 from 110% in 3Q13. 

Cautious on asset quality

We forecast KKP loan growth to slow to 10% this year. Growth from commercial loans (corporate and SMEs) should help offset slowing auto loans. KKP will start to book new corporate loans this year.

For non-interest income, we expect fees from commercial lending (banking and bancassurance fees) to
offset weak fees from the capital market. We forecast its credit cost to stay flat at a high level of 1.25% this year as we are cautious on the credit quality of its auto loans (70% of total loan books). Note that KKP will hold an analyst meeting on 4 Feb.