Kasikornbank's net profit predicted to surge 18% to THB10.9b

On the back of stronger loan growth.

Maybank Kim Eng maintains its positive view on the strong fundamentals of Kasikornbank with the 3Q13F earnings expected to remain healthy.

Maybank sees 3Q13F net profit of THB10.9b, which is flat QoQ, but up 18% YoY. Loans will expand 2.9% QoQ (+7.8% YTD) with growth seen in all segments with corporate being the best performer.

Here's more:

The NIM is likely to be sustained from last quarter and fee and Non-NII will keep the growth momentum strong. Opex has increased and we expect 1% QoQ and 18% YoY growth in PPOP.

However, KBANK has decided to raise credit costs to 85bps in order to capture the higher risk on theThai economic outlook. However, NPLs should be sustained at 2.0%.

Strong business outlook. Despite a bleaker economic outlook, KBANK remains confident that all financial targets are likely to be achieved (loan growth of 9-11%, NIM of 3.4-3.6%, mid-teen growth in Non-NII income, cost to income ratio of 45-46%).

Moreover, the PPOP will be better than what the bank projects. However, KBANK will raise credit costs from 70-80bps to 85bps for a more conservative stance on economic risks.

Should the 3Q13F earnings be inline with our forecast, the 9M13 earnings will be 78% of our full year projection.

We have decided to keep our current full year projection unchanged as we expect to see a significant earnings drop in 4Q13F on seasonality and high K-Transformation expenses. We forecast a 16% net profit growth for 2013F and a further 15% for 2014F.