COMPANY UPDATE
Thailand
Kasikornbank
(KBANK.BK/KBANK TB)*
2Q23 earnings review: weak indication inside
Neutral Maintain
Price as of 21 Jul 2023
129.5
12M target price (Bt/shr)
166.0
Unchanged/Revised up(down)(%)
-5.7
Upside/downside (%)
28.2
Key messages
Although KBANK’s earnings were in-line with
consensus estimate, guidance from analyst
meeting implies asset quality deterioration while
NPL inflows tend to be higher than expected.
Consequently, the bank changed views on credit
cost reduction to be delayed into 2025 rather than
2024 in the previous guidance. Positive upside on
NIM improvement in 2H23 will be offset by
derailed fee income and higher opex. This
guidance turns us to cut 2024 earnings by 6% and
trim target price to Bt166 (from Bt170).
Trading data
Mkt cap (Btmn/US$mn)
305,601/8,731
Outstanding shares (mn)
2,369
Foreign ownership (mn)
n.a.
3M avg. daily trading (mn)
13.04
52-week trading range (Bt)
125/157.5
Performance (%)
3M
6M
12M
Absolute
0.4
-10.7
-7.9
Relative
2.4
-1.9
-6.3
2Q
3.72
4.51
4.59
3Q
3.61
4.42
Quarterly EPS
2021
2022
2023
1Q
4.44
4.76
4.49
4Q
4.68
1.33
Share price chart
165
10
155
0
145
135
(10)
Event
Analyst meeting, 2Q23 earnings review, and 2024 earnings and target price cut
Key highlights
Weak indication inside 2Q23 earnings
KBANK reported 2Q23 earnings at Bt11bn (+2% QpQ and YoY), in-line with consensus
estimate but below our forecast by 6% as several items missed; higher NIM than estimated
but credit cost and opex remain high. 1H23 earnings were Bt22bn (-1%), made up 51%
of our full-year forecast.
NIM rose impressively, but fee income tumbled
KBANK stayed cautious in loan extension (-0.6% QoQ and -2% YoY). However, NIM rose
surprisingly (+20bps QoQ and +40bps YoY) as loan yield soared by >30bps QoQ and 95bps
YoY. As a result, NII gained +5% QoQ and +15% YoY in 2Q23 and +12% in 1H23.
However, fee income plummeted sharply at -5% QoQ and YoY in 2Q23, and -7% in 1H23.
The bank anticipates one more policy rate hike in 2H23, which will back further NIM
improvement and higher full-year target at 3.3-3.45%. However, fee income should fall
short of zero growth target in 2023.
Higher-than-expected NPL inflows, credit cost reduction postponed to 2025
Gross NPLs rose 5% QoQ after managing downward in the past four quarters due to more
inflows from SMEs and consumer loans. Sign of deterioration continued in the next quarter,
forcing the bank to raise credit cost beyond its guidance (175-200bps) but still manage to
keep at <210bps. Flows of NPLs have delayed the bank’s plan to bring down credit cost to
140-160bps from 2024 to 2025. We think this policy change may reflect an intention to
balance bottom line growth.
Cut 2024 earnings by 6%, rollover and de-rate PBV to 0.7x, reaching 12M-TP at
Bt166
Shifting credit cost reduction from 2024 into 2025 indicated the bank’s attempt to spread
the impact of high provisioning and balance 2-year earnings growth, implying that
provisioning expense should be higher than previously anticipated. As 1H23 earnings made
up 51% our FY-23F, we maintain our 2023 earnings forecast. However, we cut 2024
earnings by 6% to reflect higher credit cost at 200bps (up from 180bps) and cut loan
growth to 3% (from 5%). We rollover target price by using de-rate PBV multiple to 0.7x
(from 0.8x), reaching a new 12M-TP at Bt166, down from Bt170, and keeping Neutral call
on KBANK.
Risks
Rising NPLs and provisioning expense, loss on FVTPL on investment.
Key financials and valuations
125
115
Jul-22
Oct-22
Dec-22
Share Price
Source: SET
Chalie Kueyen
66.2658.8888 Ext. 8851
chaliek@kgi.co.th
Feb-23
May-23
Price performance relative to SET
Jul-23
(20)
Pre-pro. profit (Bt mn)
Pretax profit (Bt mn)
Net income (Bt mn)
EPS (Bt)
DPS
EPS Growth (%)
Dividend Yield (%)
P/E (x)
P/BV (x)
ROAA (%)
ROAE (%)
D e c-20A
84,896
41,348
29,488
12.45
2.49
(23.1)
2.0
10.0
0.67
0.8
7.0
D e c-21A
92,305
51,973
38,053
16.06
3.21
29.0
2.0
10.0
0.80
1.0
8.3
D e c-22A
98,505
46,585
35,770
15.10
3.00
(6.0)
2.1
9.6
0.68
0.9
7.3
D e c-23F
106,801
53,744
40,375
16.87
3.37
11.7
2.6
7.7
0.58
1.1
8.3
D e c-24F
113,185
57,490
42,848
17.90
3.20
6.1
2.5
7.2
0.54
1.0
7.8
D e c-25F
116,033
68,794
51,263
21.42
3.40
19.6
2.6
6.0
0.50
1.1
8.7
Source: Company data, KGI Securities Research
July 24, 2023
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
1
Thailand
Kasikornbank
Figure 1: Quarterly income statement
% chg
Bt mn
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
Bt mn
QoQ
YoY
QoQ
YoY
1H22
1H23
% chg
% chg
Income Statement (Bt mn)
NII
28,133
29,717
30,741
30,800
31,751
32,012
33,088
36,148
34,875
36,701
5.2
14.6
63,763
71,576
Non-NII
11,895
11,138
9,202
11,723
8,863
9,498
8,647
13,252
11,699
11,369
(2.8)
19.7
18,361
23,068
25.6
1,812
1202
2709
686
(452)
144
4,674
3,671
3,525
(4.0)
(880.0)
234
7,196
2969.7
- Gain on investment
116
330
(17)
(135)
(17)
38
(152)
(212)
39.4
57.4
(152)
(365)
140.9
- Insurance premium-net
(499)
(1887)
159
(1018)
(483)
(1423)
(1126)
(20.9)
(807.4)
(1728)
(2549)
47.5
(4.9)
(5.3)
- Fair value gain/loss
- Fee income, net
Total operating inc.
Total operating exp.
(87)
(184)
286
85
(458)
(575)
9,431
8,575
8,560
8,749
8,832
8,146
8,125
7,779
8,114
7,714
40,028
40,855
39,943
42,523
40,613
41,510
41,735
49,399
46,574
48,070
3.2
15.8
16,978
15,828
82,123
94,644
12.3
(6.8)
15.2
19,716
20,333
20,354
23,952
20,926
21,606
22,225
25,460
24,208
25,010
3.3
15.8
42,532
49,218
15.7
PPOP
20,312
20,522
19,589
18,571
19,688
19,904
19,510
23,940
22,366
23,060
3.1
15.9
39,592
45,426
14.7
PPOP-ex.FVTPL
18,500
19,320
19,773
15,862
19,001
20,356
19,366
19,265
18,695
19,535
4.5
(4.0)
39,358
38,230
(2.9)
8,650
10,807
11,296
9,580
9,336
9,852
9,948
22,784
12,692
12,784
0.7
29.8
19,188
25,476
32.8
14,846
12,979
11,682
12,466
13,887
13,589
13,536
5,574
14,089
14,439
2.5
6.3
27,476
28,528
3.8
3,035
2,548
2,026
2,120
2,700
2,454
2,546
932
2,562
2,760
7.7
12.5
5,154
5,322
3.3
11,811
10,431
9,656
10,346
11,187
11,135
10,990
4,641
11,527
11,679
1.3
4.9
22,322
23,206
4.0
Loan Loss Provision
Pre-tax profit
Income tax expense
Profit before MI
MI
1,184
1,537
1,025
445
341
416
1,450
786
685
(12.8)
100.6
317
1,471
363.3
10,627
8,894
8,631
9,901
11,211
10,794
10,574
3,191
10,741
10,994
2.4
1.9
22,005
21,735
(1.2)
4.44
3.72
3.61
4.14
4.68
4.51
4.42
1.33
4.49
4.59
2.4
1.9
9.20
9.08
(1.2)
Yield on earnings assets
3.77
3.77
3.85
3.85
3.82
3.81
3.84
4.24
4.29
4.55
3.82
4.42
- Yield on loan
4.50
4.59
4.68
4.59
4.60
4.55
4.68
5.13
5.23
5.58
4.58
5.41
- Yield on MM
0.49
0.44
0.52
0.47
0.76
0.94
0.99
1.61
1.93
2.17
0.85
2.05
- Yield on investment
2.72
2.65
2.59
2.82
2.50
2.46
2.39
2.51
2.35
2.40
2.48
2.37
Cost of funds
0.61
0.60
0.62
0.62
0.61
0.62
0.63
0.72
1.03
1.15
0.61
1.09
Net interest margin
3.16
3.22
3.21
3.15
3.19
3.21
3.33
3.62
3.46
3.63
3.20
3.55
Cost-to-income ratio
41.3
41.8
42.5
48.2
42.8
43.5
43.7
42.6
42.5
43.4
43.18
42.93
Effective tax rate
20.4
19.6
17.3
17.0
19.4
18.1
18.8
16.7
18.2
19.1
18.75
18.65
LDR
96.4
96.6
97.2
93.8
94.0
93.8
93.2
91.4
91.4
91.0
93.2
91.0
LDR (including borrowings)
91.2
91.1
90.7
87.6
87.5
87.2
86.6
86.5
86.2
85.7
86.6
85.7
ROAA
1.2
1.0
0.9
1.0
1.1
1.1
1.0
0.3
1.0
1.0
1.0
1.0
ROAE
9.9
8.3
7.9
8.6
9.5
9.1
8.8
2.6
8.6
8.7
8.8
8.7
Net profit
EPS (Bt)
(24.0)
Profitability (%)
Asset quality
NPLs (Bt mn)
102,316
106,920
105,930
104,036
106,481
109,972
87,682
92,536
87,640
92,864
% to loans
4.42
4.46
4.30
4.27
4.30
4.39
3.54
3.68
3.53
3.77
NPL coverage
147
146
148
159
155
146
148
154
156
148
Credit cost (bps)
149
180
184
157
151
157
160
363
205
207
2.38
3.81
10.21
11.00
6.91
14.37
29.74
7.94
1.05
4.29
Bad debt write-off (Bt bn)
NPL sales (Bt bn)
NPA sell-off (Bt mn)
-
-
-
-
-
30.00
25.00
17.00
35.60
1.20
1.80
1.20
2.20
3.90
3.70
2.90
-
1.80
6.0
(15.6)
Source: Company data, KGI Securities Research
July 24, 2023
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
2
Thailand
Kasikornbank
Figure 2: Key assumptions
Source: Company data, KGI Securities Research
July 24, 2023
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
3
Thailand
Figure 3: Company profile
Kasikornbank
Figure 4: Loan breakdown
KASIKORNBANK (KBANK) is a leading commercial bank in Thailand
providing full financial services to corporate, SME, and retail customers.
It conducts its businesses through a network of branches covering all
parts of Thailand and certain major cities overseas. To align with digital
banking technology, the bank transformed itself and launched digital
banking services four years ago and is now the market leader in digital
platform banking services.
Source: Company data, KGI Securities Research
Source: Company data, KGI Securities Research
Figure 5: Fee income breakdown
Figure 6: Net interest margin
Percent
Source: Company data, KGI Securities Research
Source: Company data, KGI Securities Research
Figure 7: Sales of foreclosed assets
Figure 8: Bad debt write-off
Bt bn
Bt bn
Source: Company data, KGI Securities Research
Source: Company data, KGI Securities Research
Figure 9: PBV
Figure 10: PE
Times
Times
21.0
2.0
+2.0 sd = 1.6x
1.5
18.0
+1.0 sd = 1.2x
Average = 0.9x
1.0
0.0
2017
2019
-1.0 sd = 7.9x
6.0
2020
Source: Company data, KGI Securities Research
July 24, 2023
Average = 10.4x
9.0
-2.0 sd = 0.2x
2018
+1.0 sd = 12.9x
12.0
-1.0 sd = 0.6x
0.5
+2.0 sd = 15.4x
15.0
2021
2022
2023F
2024F
3.0
2017
-2.0 sd = 5.4x
2018
2019
2020
2021
2022
2023F
2024F
Source: Company data, KGI Securities Research
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
4
Thailand
Balance Sheet
Kasikornbank
Key Ratios
Source: Company data, KGI Securities Research
Profit & Loss
Source: Company data, KGI Securities Research
Source: Company data, KGI Securities Research
July 24, 2023
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
5
Thailand
Kasikornbank
Kasikornbank – Recommendation & target price history
190
180
170
160
150
140
130
120
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Share price
Dec-22
Jan-23
Feb-23
Target price lowered
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Target price raised
Source: KGI Securities Research
July 24, 2023
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
6
Thailand
Corporate Governance
Corporate Governance Report of Thai Listed Companies
Source: www.thai-iod.com
Disclaimer: The disclosure of the survey result of the Thai Institute of Directors Association ("IOD") regarding corporate governance is made pursuant to the policy of the Office of
the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative
Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an assessment of
operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey
result may be changed after that date or when there is any change to the relevant information. Nevertheless, KGI Securities (Thailand) Public Company Limited (KGI) does not
confirm, verify, or certify the accuracy and completeness of such survey result.
July 24, 2023
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
7
Thailand
Corporate Governance
Anti-corruption Progress Indicator
Level 5: Extended
Stock
Company name
Stock
Company name
Stock
Company name
ADVANC
ANAN
BBL
BCH
BDMS
BIGC
CK
DCC
DELTA
DRT
EGCO
GFPT
ADVANCED INFO SERVICE
ANANDA DEVELOPMENT
BANGKOK BANK
BANGKOK CHAIN HOSPITAL
BANGKOK DUSIT MEDICAL SERVICES
BIG C SUPERCENTER
CH. KARNCHANG
DYNASTY CERAMIC
DELTA ELECTRONICS (THAILAND)
DIAMOND ROOFING TILES
ELECTRICITY GENERATING
GFPT
GLOBAL
GPSC
HMPRO
IRPC
KBANK
KCE
KKP
KTB
LPH
PACE
PTT
PTTGC
SIAM GLOBAL HOUSE
GLOBAL POWER SYNERGY
HOME PRODUCT CENTER
IRPC
KASIKORNBANK
KCE ELECTRONICS
KIATNAKIN BANK
KRUNG THAI BANK
LADPRAO GENERAL HOSPITAL
PACE DEVELOPMENT CORPORATION
PTT
PTT GLOBAL CHEMICAL
QH
RATCH
ROBINS
SCC
SIRI
SPALI
STEC
TCAP
TISCO
TMT
TOP
QUALITY HOUSES
RATCHABURI ELECTRICITY GENERATING HOLDING
ROBINSON DEPARTMENT STORE
THE SIAM CEMENT
SANSIRI
SUPALAI
SINO-THAI ENGINEERING AND CONSTRUCTION
THANACHART CAPITAL
TISCO FINANCIAL GROUP
THAI METAL TRADE
THAI OIL
Level 4: Certified
Stock
Company name
Stock
Company name
Stock
Company name
AAV
AP
BA
BANPU
BCP
BH
BJCHI
CBG
CENTEL
CHG
CKP
CPF
CPN
DTAC
ASIA AVIATION
ASIAN PROPERTY DEVELOPMENT
BANGKOK AIRWAYS
BANPU
THE BANGCHAK PETROLEUM
BUMRUNGRAD HOSPITAL
BJC HEAVY INDUSTRIES
CARABAO GROUP
CENTRAL PLAZA HOTEL
CHULARAT HOSPITAL
CK POWER
CHAROEN POKPHAND FOODS
CENTRAL PATTANA
TOTAL ACCESS COMMUNICATION
ERW
GLOW
GUNKUL
ILINK
KTC
LH
LPN
MAKRO
MALEE
MINT
MODERN
NOK
PTTEP
PYLON
THE ERAWAN GROUP
GLOW ENERGY
GUNKUL ENGINEERING
INTERLINK COMMUNICATION
KRUNGTHAI CARD
LAND AND HOUSES
L.P.N. DEVELOPMENT
SIAM MAKRO
MALEE SAMPRAN
MINOR INTERNATIONAL
MODERNFORM GROUP
NOK AIRLINES
PTT EXPLORATION AND PRODUCTION
PYLON
SAPPE
SAWAD
SCB
SCN
SEAFCO
SVI
TASCO
TKN
TMB
TRT
TRUE
TVO
SAPPE
SRISAWAD POWER 1979
THE SIAM COMMERCIAL BANK
SCAN INTER
SEAFCO
SVI
TIPCO ASPHALT
TAOKAENOI FOOD & MARKETING
TMB BANK
TIRATHAI
TRUE CORPORATION
THAI VEGETABLE OIL
Level 3: Established
Stock
Company name
Stock
Company name
Stock
Company name
BEM
BANGKOK EXPRESSWAY AND METRO
MTLS
MUANGTHAI LEASING
SPRC
STAR PETROLEUM REFINING
CPALL
CP ALL
SCI
SCI ELECTRIC
No progress
Stock
Company name
Stock
Company name
Stock
Company name
AOT
AIRPORTS OF THAILAND
BPP
BANPU POWER
FN
FN FACTORY OUTLET
BCPG
BCPG
BTS
BTS GROUP HOLDINGS
TPCH
TPC POWER HOLDING
Source: www.cgthailand.org
Disclaimer: The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by the relevant institution as
disclosed by the Office of the Securities and Exchange Commission, is made in order to comply with the policy and sustainable development plan for the listed companies. The
relevant institution made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to
the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company . The assessment result is therefore made
from the perspective of a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the
date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, KGI Securities (Thailand) Public
Company Limited (KGI) does not confirm, verify, or certify the accuracy and completeness of the assessment result.
July 24, 2023
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
8
Thailand
KGI Locations
China
Shanghai
Contact
Room 2703B-2704, Tower A , Shanghai Dawning Centre,500 Hongbaoshi Road Shanghai,
PRC 201103
Shenzhen
Room 24D1, 24/F, A Unit, Zhen Ye Building, 2014 Bao’annan Road,
Shenzhen, PRC 518008
Taiwan
Taipei
700 Mingshui Road, Taipei, Taiwan
Telephone 886.2.2181.8888 ‧ Facsimile 886.2.8501.1691
Hong Kong
41/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
Telephone 852.2878.6888 Facsimile 852.2878.6800
Thailand
Bangkok
8th - 11th floors, Asia Centre Building
173 South Sathorn Road, Bangkok 10120, Thailand
Telephone 66.2658.8888 Facsimile 66.2658.8014
Singapore
4 Shenton Way #13-01 SGX Centre 2
Singapore 068807
Telephone 65.6202.1188 Facsimile 65.6534.4826
KGI's Ratings
Rating
Definition
Outperform (OP)
The stock's excess return over the next twelve months is ranked in the top 40% of KGI's coverage
universe in the related market (e.g. Taiwan)..
Neutral (N)
The stock's excess return over the next twelve months is ranked in the range between the top 40%
and the bottom 40% of KGI's coverage universe in the related market (e.g. Taiwan)
Under perform (U)
The stock's excess return over the next twelve months is ranked in the bottom 40% of KGI's
coverage universe in the related market (e.g. Taiwan).
Not Rated (NR)
The stock is not rated by KGI.
Restricted (R)
KGI policy and/or applicable law regulations preclude certain types of communications, including an
investment recommendation, during the course of KGI's engagement in an investment banking
transaction and in certain other circumstances.
Excess return = 12M target price/current price-
Note
Disclaimer
July 24, 2023
When an analyst publishes a new report on a covered stock, we rank the stock's excess return with
those of other stocks in KGI's coverage universe in the related market. We will assign a rating based
on its ranking. If an analyst does not publish a new report on a covered stock, its rating will not be
changed automatically.
KGI Securities (Thailand) Plc. ( “The Company” ) disclaims all warranties with regards to all information contained herein. In no event
shall the Company be liable for any direct, indirect or any damages whatsoever resulting from loss of income or profits, arising by
utilization and reliance on the information herein. All information hereunder does not constitute a solicitation to buy or sell any
securities but constitutes our sole judgment as of this date and are subject to change without notice.
*The Company may be issuer of Derivative Warrants on these securities.
http://research.kgi.com; Bloomberg: KGIT <GO>
Please see back page for disclaimer
9