Kiatnakin Bank's net profit hits new record at THB12.4b

It grew 6% QoQ.

According to Maybank Kim Eng, the net profit grew 6% QoQ and 51% YoY to THB12.4b, hitting a new record. This, however, was slightly below our and consensus estimates of THB1.3bfrom high credit costs following rising NPLs on used cars.

Here's more from Maybank Kim Eng:

PPOP was strong with 11% QoQ and 48% YoY growth. Loans expanded well by 3.5% QoQ (+8.0% Ytd), while the NIM jumped by 43bps QoQ on RE loan repayments.

The net-interestincome expanded impressively 15% QoQ and 14% YoY, as fee income rose 31% QoQ, thanks to bancassurance and the stock market boom, coupled with FA fees from the THBSGIF deal.

However, investment gains and a loss on the sale of NPA prompted the Non-NII to decline 5% QoQ but it still grew 112% YoY. Opex decreased slightly from lower staffing costs, resulting in a lowering cost-to-income ratio to 42%, from 45% last quarter.

Rising NPLs forced KK to raise credit costs by 25% QoQ to THB747m. The NPL ratio stayed at 3.4% with a 112% coverage ratio.

What’s next? The 1H13 net profit accounts for 47% of our full year projection of THB5.1b, thus we may make a slight trim in our projection in order to reflect the actual 1H13 number.

However, we still believe that earnings performance in 2H13F will remain strong at THB1.2-1.3b/quarter, backed by the investment banking business. A key risk we need to watch closely is the rising NPLs on used cars.