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Bangkok Bank (SET:BBL) is one of the largest regional banks in Southeast Asia with total assets of approximately 2.76 trillion baht. The Thailand-based bank serves retail customers, small and medium size enterprises (SME), and corporate clients. It has 17 million business and retail customer accounts, approximately 240 business centers and business desks, and a nationwide network of over 1,200 branches. Bangkok Bank also operates overseas branches in China, Hong Kong, the United States, the United Kingdom, Singapore, Indonesia, Laos, Vietnam, the Philippines and other countries.
The company said on January 20, 2016, that its fourth-quarter 2015 revenues were 26.41 billion baht, beating the 25.3 billion baht consensus estimate of 5 analysts, according to the Financial Times. The company posted fourth-quarter 2015 earnings of 4.03 baht per share, missing the 4.21 baht per share consensus estimate of 5 analysts. The bank said its fourth-quarter net profit dropped 12% from a year earlier, mainly due to higher provisions following a rise in bad debts. The provision for credit losses is an estimated amount to be lost and is treated as an expense on the company's financial statements. Bangkok Bank’s non-performing loans (NPL) rose to 2.8% of its total loans, from 2.1% at the end of 2014, according to Reuters.
Investors may have a new worry about Bangkok Bank’s risk profile and bad debts, as the Broadcasting and Telecommunications Commission (NBTC) of Thailand just canceled Thai TV Co’s two digital TV licenses this week, after the company failed to pay its 288 million baht second installation and annual fees, according to the Nation. On February 2, the NBTC said the regulator might seek 1.63 billion baht from Bangkok Bank under the bank’s guarantee to Thai TV Co on behalf of Thai TV’s customers, if the company fails to pay the fees.
In late December 2015, Pete Bodharamik, CEO of Jasmine Mobile Broadband, which is wholly-owned by Jasmine International Pcl (SET:JAS), said that the company lined up 75 billion baht from a consortium of banks, which one of them was Bangkok Bank. True Corporation (SET:TRUE) and Jasmine International won the bids for the two 4G spectrum licenses from the NBTC and will pay a record 76.3 and 75.67 billion baht, respectively. According to the Bangkok Post, rumors circulated in the industry earlier in February that Bangkok Bank rejected Jasmine's initial borrowing plan.
From our technical viewpoint, BBL is facing significant downside risk, as the stock is now testing the 15-year trendline support of the bearish ascending wedge chart pattern, in addition to testing the support level of the bearish descending triangle chart pattern. The stock could pull back to the 110 baht a share level, if the support levels can’t hold. According to the Financial Times, the consensus amongst 29 polled investment analysts covering Bangkok Bank gave the company an Outperform rating, with the median 12-month price target of 185 baht a share.
Disclosure: No position and no recommendation for any companies
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