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Kasikornbank PCL (SET:KBANK), 25.25% stake owned by Thai NVDR Co., Ltd. and 10.68% stake owned by State Street Bank Europe Limited, as of September 8, 2016, is the fourth largest commercial bank in Thailand as measured by total assets, loans, and deposits with about 15% market share. KBANK provides a broad range of commercial banking, securities, and other related businesses. The bank operates 1,121 branches throughout Thailand and other countries, including China, Japan, U.S., Myanmar, Laos, Vietnam, Indonesia, Cambodia and the Cayman Islands.
The company said on July 21 that its second-quarter 2016 revenues were 37.67 billion baht, missing the 38.84 billion baht consensus estimate of 4 analysts, according to the Financial Times. Kasikornbank's semi-annual 2016 EPS came in at 7.97 baht, missing the 8.49 baht consensus estimate of 2 analysts.
The bank reported loan growth during the first-half 2016 of 6.21% year-on-year, compared to its full-year target range of 6-7%. KBANK said its consolidated non-performing loans (NPLs) increased 38.9% to 56.74 billion baht, from 40.84 billion baht during the same period last year, making the bank set aside its allowance for impairment loss on loans and debt securities, or loan-loss provisions, of 8.72 billion baht for the quarter, compared to 6.04 billion last year. Loan quality continued to deteriorate, as the NPL ratio increased to 2.89% in the first-half 2016, compared 2.70% in 2015.
For 2015, KBANK reported a dividend of 4.0 baht a share, unchanged from 2014. The 24 analysts covering the company expect dividends of 4.04 baht a share for the upcoming fiscal year, representing a year-over-year increase of 0.93%. The next earnings announcement from Kasikornbank, for the third-quarter 2016, is expected on October 21.
Mr. Admit Laixuthai, a senior vice president at Kasikornbank, told Reuters in April after the release of the first-quarter 2016 earnings that, "NPLs for the whole banking system are likely to rise further this year as the overall economy remains weak … I can't tell when NPLs will peak. It depends on the economic situation." In late-September, Kasikorn Research Center (K-Research) raised its GDP forecast for 2016 to 3.3%, from 3% previously, on anticipation that the recovery momentum will continue into the second-half.
From our technical viewpoint, shares of KBANK broke out the descending wedge chart pattern in July, but were rejected at the trendline head resistance. The stock is trading near the 190 baht level and could break out, or pull back, along with the broader market. There is support at the 174 baht level, or the 200-day SMA. A bearish head and shoulders chart pattern has now emerged and thus, significant downside risk rises if KBANK continues to fall below the 144 baht level.
According to the Financial Times, the consensus amongst 27 polled investment analysts covering Kasikornbank gave the company an Outperform rating, with the median 12-month price target of 206 baht a share, as of October 7, 2016.
Disclosure: No position and no recommendation. |
