Analysts forecast THB8.5b net profit for Krung Thai Bank in 2Q

Thanks in part to healty loan growth.

Analysts predict Krung Thai Bank to post a net profit of THB8.5b in the second quarter of 2014, up by 32 percent YoY and 2 percent QoQ.

According to a research note from Maybank Kim Eng, meanwhile, pre-provision profit is seen to grow 15 percent YoY and 19 percent QoQ to THB14b, thanks to strong loan growth, sustainable net interest margin (NIM) and lower operating expenses this year.

The report also noted that Krung Thai Bank posted 10.7 percent YoY loan growth and 4.7 percent loan growth for 5M14, the highest level in the banking sector which grew 7.8% percent YoY and 1 percent YTD.

It also said growth drivers should come from the large corporate and consumer loans and that loan demand is expected to improve in 2H14 due to the political easing and improved consumer confidence.

Here's more from Maybank Kim Eng:

Fee income from the retail segment (40% of total fee income) should grow YoY, thanks to bancassurance, mutual funds and credit card fees.

However, we believe that the bank’s fee income growth target of 15% this year is very challenging given the loan related fees (20% of total fee income) and fees from trading and Forex transactions (20% of total fee income) are grow in line with loan growth.

NIM should be flat QoQ at 2.79% due to lower funding costs from the expiration of the expensive fixed deposits (4% interest rate with 22 months) in 2Q14.

The bank issued sub-debts of USD700m at 5.2% for 10.5 years to boost its Tier II capital. We think the USD bond should not impact NIM in 2H14 due to the small portion of bond (1% of total loan book) and strong loan growth.