BBL (Outperform: Proper Value 175 baht) is followed by PBV at 0.45x, lower than the Covid-19 period where the average trade was 0.5x, although the ROE is higher, with an expected Div yield of around 5.3%, while TTB (Outperform: Proper Value 1.98 baht) is expected to support tax benefits earnings growth in 2024-25, which is above the group average, with an estimated Div yield of 6.5% per annum.
DIV's return in the first six months of 2024 is expected to be around 3% (assuming DPS equals 1H23 at 0.05 baht), which is higher than other commercial banks, ranked in order of preference as follows: KTB (Neutral) > TISCO (Neutral) > SCB (Neutral) > KKP (Underperforming)
** Highlight KBANK TTB as a top stock.
Pie Securities Public Company Limited revealed in its analysis that the combined net profit of 8 banks in the second quarter of 2024 is expected to reach 56 billion baht, up 3.8% from the same period last year and down -1.3% from the previous quarter. The profits increased compared to the same period last year.
Supported by higher net interest income. Debt reserves were down but earnings were down on the previous quarter due to lower net interest income from loans and lower net interest margin, as well as weaker fee income due to the slow economic recovery. Investment conditions are volatile
Management expects KBANK KTB TTB Group to be the group that will grow its net profit compared to the same period last year. But it decreased from the previous quarter, while BBL, SCB and TISCO are the groups that increased its profit from the previous quarter. But it decreased from the same period last year.
As for KKP TCAP, it is the group whose net profit fell both year-on-year and quarter-on-quarter, with total loans shrinking in 2Q24 compared to the previous quarter. But it still rose slightly by 0.2% in 1H24 due to the impact of the limited and uneven recovery of the Thai economy, which caused a slowdown in credit demand. Banks strictly control new lending.
The ministry expects total loans in the second quarter of 2024 to decline by 0.5% from the previous quarter (growth of 0.1% compared to the same period last year), but to rise by 0.2% in the first half of 2024, despite the bank's emphasis on defensive strategies. Credit is not growing. But it allows you to control the quality of your loans well.
Management expects the banking group’s average NPL ratio to be stable from the previous quarter at 3.6%, which will enable banks to mitigate their debt provisions. The banking group’s coverage ratio is expected to remain stable at 183.6% in Q2 2024. Supporting Future Uncertainties
Total net profit in the first half of 2024 was 112.7 billion baht, up 6.7% year-on-year. Overall, the weak recovery in the Thai economy is a factor that is putting pressure on credit expansion, and net interest margin continues to decline due to higher interest costs.
Meanwhile, loan quality remained stable. The bank is holding debt. Supporting weak loan portfolios in advance to some extent in 2023. Amid the slow recovery of the Thai economy in the first half of 2024, the ministry still has a positive outlook on the recovery of the Thai economy in the second half of 2024, which will be supported mainly by funds from the 2024-2025 budget, and the government's economic stimulus measures
Including a strong recovery in the tourism sector. We see the banking group’s operating performance returning to improved growth in Q3 2024 and falling to a year-on-year low in Q4. We expect total net profit to continue to grow in 2024-25, but at a slower rate of 7.6% and 7.3% in 2024-25, from 18.4% in 2023. TTB is expected to have a net profit growth rate of 14% in 2024, BBL is expected to grow by 9.7%, KBANK is expected to grow by 9.1%, and TISCO is only expected to see a net profit decline in 2024 of 3.3%.
In addition, the capital fund is strong to support future uncertainties. This allows the bank to reduce its debt reserves. This is a factor that helps reduce the impact of loans and net interest margin in the second quarter of 2024. In 2024, total net profit is expected to grow at a slower rate of 7.6% compared to the same period last year (from 2023, which grew by 18.4%), but return on equity continues to rise by 9.1% in 2024 (from 8.8% in 2023).
Although the growth rate is not outstanding, the dividend yield is high at 7% in 2024, the valuation is not expensive and the banking group is trading at 0.5 times PBV'24E or -1.0SD from the 10-year average. “Equal to the Market” picks KBANK and TTB as outstanding stocks.
“Reader. Infuriatingly humble coffee enthusiast. Future teen idol. Tv nerd. Explorer. Organizer. Twitter aficionado. Evil music fanatic.”