Kasikornbank's corporate loans increase 6.1% YTD

It's already hit its FY15 growth target.

It has been noted that with the softer SMEs loan growth in 1Q15 (+2.2% YTD), Maybank Kim Eng sees high loan demand from conglomerates for short-term working capital.

According to a research note from Maybank Kim Eng, further, Kasikornbank’s (KBank) corporate loans grew 6.1% YTD and has already hit FY15 target of 4-6% growth.

Maybank Kim Eng expects KBank to focus on recurring fee and deal-based fee income rather than credit growth in 2015.

Corporate loan offers better asset quality with 1.40% NPLs ratio compared to 2.40% for SMEs and 1.80% for retail loans as at February 2015.

Here's more from Maybank Kim Eng:

1Q15 earnings preview. We forecast loans will grow 2.0% QoQ in 1Q15. NIM will drop slightly to 3.74% on the lower asset yield from the interest rate cut.

So NII will grow 9% YoY. Non-interest income is expected to grow 8% YoY, thanks to retail fee based income from transactional services and credit card business.

Cost-to-income ratio (CIR) should stay at 41-42%. Note that KBank normally posts low CIR in 1Q and peak in 4Q.

We expect high credit cost of 102bps (annualized) or THB3.9b with 2.40% NPLs ratio in 1Q15, mostly from SMEs lending. Earnings should grow 4% YoY and 24% QoQ to THB12.4b (EPS: THB5.18).

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