Target price : Bt11.90
Recommendation : BUY
Closing Price (21 April 09) : Bt9.95
1Q09 profit beat forecast by 20.3%
- BAY reported strong pre-tax profit growth of 28.4% YoY and 54.2% QoQ in 1Q09. Despite slowing
loan growth, the absence of massive investment losses and losses on sale of foreclosed assets helped fuel a
profit recovery.
- Due to the resumption of tax payments, net profit therefore clocked in at Bt1.03b, down a
marginal 0.3% YoY but up 21.8% QoQ. The result came in 20.3% better than our forecast.
- We keep a BUY rating on BAY with a 2009 price target of Bt11.90/share.
1Q09 net profit of Bt1.03b, off 0.3% YoY but up 21.8% QoQ
BAY, Thailand's fifth largest lender by assets reported a 1Q09 profit of Bt1.03b, up 21.8% QoQ.
Despite flagging loan demand, pre-tax profit grew as high as 54.2% QoQ. Net interest margin fell 54 basis
points to 3.5%, as the bank pumped up liquidity in preparation for acquisition of two consumer finance
businesses AIGRB and AIGCC. Thanks to the absence of massive investment losses and losses on sale of
foreclosed assets as witnessed in the prior quarter, profit therefore recovered strongly. The cost to
income ratio averaged 79.9%, down from 87% in the prior quarter.
On a YoY basis, the profit figure was relatively flat, down a marginal 0.3%. Pre-tax profit
expanded 28.4% YoY. Net interest income grew 6.8% following acquisition of GECAL in Feb 2008. Net interest
margin was flat at 3.6%. Fee income rose with the absence of losses on CDOs as witnessed in the same
quarter in 2008. The cost to income ratio fell from a year-ago level of 82.9%.
At end-Mar 2009, the bank had gross non-performing loans of Bt4.04b, up 4.8% from end-2008 and representing 6.6% of the loan portfolio. The NPL coverage ratio stood at 62.2%, unchanged from end-2008.
1Q09 profit beat forecast by 20.3%
The profit figure came in 20.3% better than our forecast of a Bt854.10m, as fee income and FX gain were 13.8% and 4.2% higher than our forecasts respectively. The bank booked a Bt75.27m gain on sale of non-performing assets (NPA) in 1Q09. Operating expenses were also below our forecast, as other expenses dropped 25.3%. The cost to income ratio averaged 79.9% in 1Q09, below our forecast of 81.9%.
BUY recommendation
The first quarter result accounted for only 16.3% of our 2009 full-year forecast of Bt6.30b. We however believe AIG deal should bolster the bank's inorganic growth, especially in the second half of the year after acquisition of two consumer finance businesses AIGRB and AIGCC were completed on Apr 8, 2009. The bank is still looking at opportunities to grow via acquisitions. Given that its capital adequacy ratio (CAR) was strong at 15.6%, we believe its capital base is not a worry. We keep a BUY rating on BAY with a 2009 price target of Bt11.90/share.
By Phillip Securities (Thailand) Plc. on Apr 22, 2009
USA Cities
Aurora Colorado,Tucson Arizona,Dallas Texas ,New York New york,Toledo Ohio,Laredo Texas,Henderson Nevada,Akron Ohio,Chandler Arizona,Buffalo New York ,Santa Ana California ,Plano Texas,Oakland California,Tulsa Oklahoma,Oyster Bay New York,Cincinnati Ohio,Albuquerque New Mexico ,Lincoln Nebraska,Milwaukee Wisconsin,North Hempstead New York,Raleigh North Carolina ,San Antonio Texas,Pittsburgh Pennsylvania,Honolulu Hawaii,Tampa Florida,St. Paul Minnesota ,Anaheim California,Fresno California,Arlington Texas ,Lexington-Fayette Kentucky,Miami Florida,Columbus Ohio,Denver Colorado,Sacramento California,Durham North Carolina ,Virginia Beach Virginia ,Colorado Springs Colorado ,San Jose California ,Austin Texas,Washington District of Columbia,Birmingham Alabama,Las Vegas Nevada ,Mesa Arizona,Newark New Jersey ,Philadelphia Pennsylvania ,Rochester New York ,St. Petersburg Florida ,Jacksonville Florida,Hialeah Florida,Boston Massachusetts,Cleveland Ohio,Fort Wayne Indiana ,Wichita Kansas ,Seattle Washington,Memphis Tennessee,Nashville-Davidson Tennessee,Long Beach California ,Chesapeake Virginia,Stockton California,Detroit Michigan,Babylon New York ,San Francisco California ,Norfolk Virginia,El Paso Texas ,Atlanta Georgia,Lubbock Texas,Madison Wisconsin,Charlotte North Carolina ,Orlando Florida,Reno Nevada,Los Angeles California,Kansas City Missouri ,New Orleans Louisiana ,Baton Rouge Louisiana ,Houston Texas ,Bakersfield California,Oklahoma City Oklahoma ,Jersey City New Jersey,St. Louis Missouri ,Scottsdale Arizona,Omaha Nebraska,Riverside California,Islip New York ,Glendale Arizona,San Diego ,Corpus Christi Texas ,Chicago Illinois ,Garland Texas,Greensboro North Carolina ,Chula Vista California ,Baltimore Maryland,Portland Oregon ,Phoenix Arizona ,Minneapolis Minnesota,Hempstead New York ,Anchorage Alaska,Modesto California,Brookhaven New York ,Indianapolis Indiana,Fort Worth Texas
