Bank of Ayudhya's loans surge 9.6% YoY

Housing and SME segments drove the growth.

Thailand-based Bank of Ayudhya's loans grew 9.6% YoY, 3% QoQ and YTD driven by the housing (+8% YTD) and SME (+6%YTD) segments.

According to a research note from Maybank Kim Eng, HP lending grew 2% YTD, which contradicted other auto lenders.

Meanwhile, Net interest income growth was 3% QoQ, thanks to strong NIM of 4.28% (+3bps QoQ) and loan growth.

Non-interest income grew 9% YoY and QoQ led by loan-related fees, banassurance and mutual fund business while trading income and FX fees remained weak.

On the cost side, OPEX was flat QoQ and YoY with lower cost-to-income ratio of 47% from 49% in 2Q14.

Here’s more from Maybank Kim Eng:

Weaker asset quality. Provisions jumped 55% YoY and 15% QoQ due to NPLs rising 14% QoQ to THB34b, driven mainly by the SME segment and the reclassification of one corporate account.

NPL ratio increased to 3.54% from 3.2% in 2Q14 while coverage ratio fell to 122% from 133% in 2Q14.

Maintain SELL. Stock is trading at 16x 2015 PER, 1.9x P/BV with 12.5% ROE, which is relatively expensive compared to the sector.

We prefer big banks (KBANK, KTB and BBL) to BAY due to cheaper multiples, more diversified revenue structure and higher free float.