The cycle of increasing interest rates seems to have not yet reached an end after the Monetary Policy Committee issued a unanimous decision. Increase the interest rate by 0.25% annually to 2.50% from the level of 2.25% on September 27, 2023 with immediate effect, the highest in 10 years, in preparation for inflation that will increase as a result of the government’s money injections. . Gradually, all banks, small and large, announced interest rate increases, close in succession.
However, the third quarter/66 period has already passed, as the index recorded a new low in 3 years, falling below the level of 1450 points, and therefore the bank’s budget that began to be announced is the first. The work will be experimental in the second half of the year. The announcement is expected to begin on October 12, 2023, the first day.
Chu BBL is the best profitable choice. Q3/66 achieved outstanding growth of 29.1%.
On the other hand, Phillip Securities (Thailand) believes that interest rate policy will rise and it is expected to have a positive impact on the banking group. Still gives weight to “invest more than market”
Select BBL as the group’s top pick, the bank is expected to have the highest increase in profit year-on-year, with profit reaching 9.9 billion baht, an increase of 29.1%, although loans will shrink but interest income will rise significantly and provisions. Decreased, but if compared to the previous quarter, KKP is expected to be the most outstanding, and is expected to achieve a profit of 1.5 billion baht, an increase of 7.5% from increased interest income and lower losses on recovered vehicles.
Therefore, the total Q3/66 earnings of all eight banks under analysis by Phillip Securities (Thailand) including BAY, BBL, KBANK, KKP, KTB, SCB, TISCO and TTB are expected to be 55.7 thousand million baht, which is equivalent to 55.7 thousand million baht. An increase of 5.8% year-on-year due to the increase in loan interest rates resulting in increased interest income. Although interest expenses and expenses are expected to increase, resulting in a gross profit of 175 billion baht in the first nine months, up 12.40% year-on-year.
Meanwhile, profit on a quarterly basis is expected to decline by 8.1%, and although interest income is higher, interest costs and expected increases in provisions will drag down the group’s profits.
Better budget On an annual basis but decreased on a quarterly basis
Meanwhile, InnovationX Securities revealed that in the third quarter of 1966, the bank’s cost of credit will rise by 0.27% year-on-year but fall by 0.50% quarter-on-quarter, mostly because BBL has already placed a large amount of reserves in the other half. No special provisions occurred for a single large corporate client and CardX again in Q3/23.
Non-performing loans are expected to increase as a result of the gradual increase in the repayment rate of restructured debts. Uneven Economic Recovery Global Economic Slowdown Additionally, net interest margin in Q3/23 is expected to increase by 0.50% QoQ and 0.38% QoQ from the increase in interest rates in August 2023 and in Q2/23. .
Therefore, the total Q3/66 earnings of all eight banks under Innovest EX Securities analysis, including BBL, KTB, SCB, KBANK, BAY, TTB, TISCO and KPP, are expected to be 598,000 million baht, down 1% q-o-q but will increase 14% q-o-q. Annual basis. As a result, in 2023, earnings are expected to grow by 20%, loans will grow by 4%, net interest margin will expand by 0.40%, and credit costs will increase by 0.12%. The shares have target prices of 210 baht and 25 baht, respectively.
The bond market is hot. Pull the credit down
The research department of CGS-CIMB Securities (Thailand) expects the bank’s cost to income ratio in 3Q66 to be around 43.5%, up from 2Q2066 of 42.9% due to business expansion and investment in IT systems. Meanwhile, loan growth is expected to decline by 0.4% year-on-year but rise by 0.1% quarter-on-quarter as a result of large corporate clients repaying debt. Some clients resort to raising funds through the bond market.
The net interest margin is expected to increase by 0.80% on a quarterly basis to 3.49% as a result of the gradual increase in loan interest rates. Reflecting a 0.50% interest rate increase in June 2023, while Thai banks increased interest rates on all benchmark loans by 0.20-0.25% in Q3/66 and are expected to continue increasing interest rates in Q4/66 after the central bank . Thailand raised official interest rates on September 27, 2023.
Therefore, the total Q3/66 earnings of all seven banks under analysis by CGS-CIMB Securities (Thailand) consisting of BBL, KBANK, SCB, KTB, TTB, TISCO and KKP are expected to reach 52.4 billion baht, an increase of 52.4 billion baht. Up 0.4% q-o-q and 18% y-o-y, he identified BBL and SCB as the top stock picks, giving target prices of 193 baht and 145 baht respectively.
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