Analyst predicts 21% net profit growth for Bangkok Bank in 2013F

Profit also grew 21% in 2012.

According to Maybank Kim Eng, BBL reported inline-with-expected 4Q12 earnings of Bt8.3bn. Overall; the 2012 net profit grew 21%, while the analyst expects a further 21% growth this year. 

Here's more from Maybank Kim Eng:

We are 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. We rate this a BUY with a Bt232 target price.

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.

Forecast 21% earnings growth for 2013F. BBL has set a 6-8% loan growth target (corporate 6-8%, SME 9-11%, retail 10-12%, International 3-5%) for 2013F. This does not include a government infrastructure investment factor.

Moreover, BBL loans normally beat the company target (we expect 9.5% growth for BBL this year). In business strategy, BBL will continue focusing on corporate banking with the aim to raise income from retail banking also.

The NIM is expected to be maintained at 2.5-2.6% with fee income growth of 10%, a declining cost-to-income ratio to 42-43% and an unchanged Bt6.5-7.0bn credit cost. Overall targets are quite inline with our projection. We expect 21% net profit growth for 2013F and further growth of 14% in 2014F.