Overview of Bangkok Bank’s 4Q24 Results
Bangkok Bank Public Company Limited (BBL), Thailand’s third-largest commercial bank by market capitalization, has demonstrated steady performance in its fourth-quarter 2024 (4Q24) results. The report by UOB Kay Hian highlights the bank’s resilience amidst economic recovery challenges and provides a detailed look at its performance metrics.
Key Financial Highlights
- 4Q24 Net Profit: BBL reported a net profit of Bt10.4 billion, marking a 17% year-on-year (yoy) increase but a 17% quarter-on-quarter (qoq) decline. The full-year net profit for 2024 stood at Bt45.2 billion, up 8.6% yoy.
- Net Interest Income (NII): The bank’s NII declined by 3% yoy but grew by 2% qoq, reflecting the challenges in interest income growth.
- Non-Interest Income (Non-II): Non-II surged 54% yoy to Bt10.8 billion but dropped 13% qoq, primarily due to a reduction in gains on financial instruments and investments.
- Loan Growth: Outstanding loans increased to around Bt2.69 trillion, growing 1% yoy and 2% qoq. Corporate loans accounted for 46% of the total portfolio in 2024, showcasing significant expansion in this segment.
- Non-Performing Loan (NPL) Ratio: The NPL ratio fell significantly from 3.4% in 3Q24 to 2.7% in 4Q24, attributed to successful debt restructuring efforts.
- Loan-Loss Coverage (LLC) Ratio: The LLC ratio improved from 267% in 3Q24 to 334% in 4Q24.
Strategic Insights and Stock Impact
The report underscores BBL’s positive trajectory in loan growth, driven by corporate lending. While the reduction in NPL ratio and credit costs is encouraging, UOB Kay Hian cautions that these metrics might revert to historical levels despite economic recovery signs. The bank’s strong provision policies and focus on corporate loans are expected to support asset quality improvements.
BBL’s non-interest income performance was mixed, with gains in financial instruments declining qoq. Additionally, the bank’s cost-to-income ratio improved to 48.0% in 2024 from 48.8% in 2023, reflecting better operational efficiency.
Earnings Forecasts and Valuation
UOB Kay Hian has revised its net profit forecasts for 2025 and 2026 upward by 3.4% and 1.5%, respectively. The bank’s 2025 earnings are projected at Bt44.8 billion, with consistent growth expected in the following years.
The target price for BBL is maintained at Bt170.00, implying a 12.2% upside from the current share price of Bt151.50. The valuation is based on the Gordon Growth Model, incorporating an 11% cost of equity and a 2% long-term growth rate. This translates to a 0.55x 2025F price-to-book (P/B) ratio, slightly above its five-year average.
Environmental, Social, and Governance (ESG) Initiatives
BBL has made significant strides in its ESG practices, earning a CG Report score of 5 and an AA rating in the SET ESG Rating. The bank’s initiatives include:
- Environmental: Promoting sustainable operations, resource conservation, and reducing its carbon footprint.
- Social: Creating a fair and supportive workplace, fostering continuous employee development.
- Governance: Upholding principles of good corporate governance to ensure sustainable growth and strong financial performance.
Key Financial Targets vs. Actual Performance
BBL’s 2024 performance met or exceeded several of its financial targets:
- Loan Growth: Actual growth was 1%, slightly below the 3-5% target.
- NPL Ratio: Achieved 2.7%, within the ~3% target.
- Net Interest Margin (NIM): Outperformed the ~2.8% target with a 3.06% margin.
- Cost-to-Income Ratio: Met the high-40s% target with a 48.0% ratio.
- Credit Cost: Exceeded the 0.9-1.0% target, ending at 1.29%.
Investment Recommendation
UOB Kay Hian recommends a “HOLD” rating for Bangkok Bank, citing its steady financial performance and robust corporate loan portfolio. While the bank’s asset quality continues to improve, uncertainties around credit costs and NPL trends warrant a cautious approach. The potential for an upgraded dividend payout serves as a possible catalyst for future stock performance.
