Tuesday, July 21, 2009

Bangkok Bank Q2 profit down, prospects improving

Published: 20 Jul 2009 02:58:30 PST

* Q2 net profit down 3.4 pct to 4.86 bln baht

* Lending seen improving in H2 as govt spending rises

* Number two Krung Thai Bank posts rise in net profit (Adds analyst comment, other banks' results)

BANGKOK, July 20 - Bangkok Bank , Thailand's biggest lender, reported a 3.4 percent drop in quarterly net profit on Monday, hit by a contraction in loans while provisions remained high, but that was smaller than expected.

The prospects of the market leader and other Thai banks are likely to improve in the second half of the year due to a revival in loan demand spurred by government spending to stimulate the economy, analysts said.

However, net interest margins in the banking industry will drop this year if banks cut lending rates further in the third quarter, as analysts expect, while rising bad debt could boost the need for provisions.

The bank -- a benchmark for domestic industry -- said its April-June net profit fell to 4.86 billion baht ($143 million) from 5.03 billion baht a year earlier, beating an average forecast of 4.52 billion baht by nine analysts polled by Reuters.

"The net profit is higher than the consensus as it seems the bank was doing well with cost controls, while its net interest margins are higher than expected," said Worawat Saisuphatphol, a banking analyst at KGI Securities.

Ahead of the results, full-year net profit was expected to drop 10.7 percent to 18 billion baht, according to Reuters Estimates.

However, Executive Chairman Kosit Panpiemras has said the bank could hit its 2-4 percent loan growthtarget this year and that would help push 2009 earnings near to last year's 20.2 billion baht.

Quarterly profits were hit by a 6.2 percent drop in outstanding loans in the six months to 1.1 trillion baht. Net interest margins were about 3.04 percent in the quarter, down from 3.37 percent a year earlier as a result of lending rate cuts.

The bank set aside provisions of about 2.0 billon baht, in line with an average forecast from analysts.

The bank, which has assets of 1.73 trillion baht, said gross non-performing loans fell to 4.6 percent of loans at the end of June from 4.75 percent at the end of March.

MIXED RESULTS ELSEWHERE

At the same time, number two Krung Thai Bank reported a 15 percent rise in quarterly net profit as stronger loan demand offset rising provisions against bad debt. Smaller rivals reported mixed second-quarter results last week, with fourth-ranked Kasikornbank posting a 13 percent drop in profit, hit by declining loans, flat net interest margin and rising provisions.

Net profit at sixth-ranked TMB Bank fell 66 percent, but number seven Siam City Bank reported a 48 percent surge in profit to 1.22 billion baht and analysts rated it a "buy" because of its strong fundamentals.

Bangkok Bank, valued at $6.0 billion on the Thai bourse, closed up 2.82 percent at 109.5 baht before the results came out on Monday. The main Thai index <.SETI> rose 2.95 percent.

Its shares have risen 59 percent since the start of the year, outperforming a 36.4 percent rise in the mainstock index <.SETI>. Bangkok Bank's stock tumbled 41.5 percent in 2008. ($1=33.99 Baht)

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