BBL-KBANK-SCB shares of leading banks in active trading, hoping to achieve good profits in Q4/66, expects the profits of the entire group to grow by 19.6%.

BBL-KBANK-SCB Busy Trading Looking forward to bright earnings in 4Q23, we expect the entire group's earnings to grow +19.6% and continue to perform well in 2024.

Journalists report on the movement of commercial bank stock prices. It rose strongly, led by Bangkok Bank, or BBL, by 1.64% or 2.50 baht, bringing the price to 154.50 baht, and turnover 782 million baht.

Kasikorn Bank or KBANK rose 1.13% or 1.50 baht, bringing the price to 134.50 baht, and turnover 448 million baht.

Credit and Savings Bank

Finansia Syrus Securities said in its analysis that the banking group expects 4Q23 net profit (7 banks) at 450 billion baht -10.7% QoQ but +36.1% YoY for lower quarterly profit. We expect all banks to adapt. All of them declined, with KKP and KTB being the worst, while BBL and TISCO are the best. Meanwhile, Yy rose in almost all banks, except for KKP. The reason for the decrease in profits on a quarterly basis is due to the increase in operating expenses during the fourth quarter of each year and the increase in allocations, but this will be compensated by an increase in net interest income and non-interest income. The significant increase in earnings was due to the expansion of net interest margin following higher interest rates and a slight growth in loans.

It puts the expected net profit for the full year of 2023 for all seven banks at 197.8 billion baht +19.6% y/y, while net profit for 2024-25 is expected to be +5-6% y/y. We still give the investment weight as Neutral, choosing KTB (target price 23.60 baht) and KBANK (target price 152 baht) as the better pick.

Yuanta Securities (Thailand) said that it continues to maintain the investment weight in the banking sector at “neutral” because the performance of the fourth quarter of 2023 will be the lowest period of the year, and in 2024, the net interest margin is expected to start to decline slightly. Because official interest rates are beginning to stabilize, the increase in asset returns is limited, while deposit costs are likely to increase due to the renewal of fixed deposits.

However, bank stocks are still interesting in terms of valuation because they are trading with a PBV that is not as high compared to the past. We selected KBANK(TP@162) as our top pick, and we expect 4Q23 earnings to grow significantly year-over-year from a low base last year due to additional reserves, significant numbers and a net interest margin that continues to increase including asset quality that is beginning to Recovery. Furthermore, it currently trades with a 2024 PBV of up to 0.5 times.