Bank of Ayudhya's 4Q15 earnings feared to have dropped 18%

Blame it on post-merger expenses with BTMU.

From Maybank Kim Eng's recent visit with the management, the analysts gleaned that operating expenses (opex) have expanded in 4Q15 partly from post-merger cost and also as some costs tended to be booked at the year end. In 4Q15, the QoQ spike could more than offset the rise in the operating income, pulling down earnings by 18% QoQ. 

"We estimate that loans rose 2% in 4Q15 driven by expansion in the corporate and consumer segments, and based on our estimate this could partly push up asset yields resulting in a 7bps expansion in the net interest margin that then translates into 3.2% QoQ rise in net interest income."

Fee income remained healthy, +2% QoQ, growing in tandem with loan growth. However, Maybank Kim Eng thinks other income would likely be flat as there were no new initiatives in 4Q15. Offsetting the topline growth is the rise opex by about 20%QoQ based on the management’s guidance. 

"Part of the spike is seasonal but another part is also due to post-merger expenses with BTMU. With the higher opex, pre-provision profit could softened by 13.6% QoQ and down 4.5%YoY."