Date of Report: 22 October 2024
Broker: UOB Kay Hian

Company Overview

Krung Thai Bank (KTB) is one of the largest commercial banks in Thailand, holding approximately 15% of the credit market. The bank has a strong focus on corporate lending, which constitutes 31% of its loan portfolio.

Stock Data

• Share Price: Bt21.40
• Target Price: Bt25.00
• Upside: +16.8% (Previous Target Price: Bt24.50)
• GICS Sector: Financials
• Bloomberg Ticker: KTB TB
• Shares Issued: 13,976.1 million
• Market Cap: Bt300,485.3 million (US$9,074.0 million)
• 3-Month Average Daily Turnover: US$36.6 million
• 52-Week High/Low: Bt22.00/Bt15.40

Recent Financial Performance (3Q24)

• Net Profit: Bt11.1 billion (+8% YoY, -1% QoQ)
• Non-Interest Income (Non-II): Bt10.7 billion (+16% YoY, +14% QoQ)
• Net Fee and Service Income: Bt5.6 billion (+7% QoQ)
• Total Other Operating Income: Bt5.1 billion (+23% QoQ)
• NPL Ratio: Increased slightly to 3.14% from 3.12% in 2Q24
• New NPL Formation: Declined to 0.9% in 3Q24 (down from 1.2% in 2Q24)

Asset Quality

• Non-Performing Loans (NPLs): Fell 2.4% QoQ, indicating improved asset quality.
• Loan-Loss Coverage Ratio: Increased to 184% in 3Q24 from 181% in 2Q24.
• Provision Expenses: Set aside Bt8.3 billion in 3Q24 (+4% QoQ).

Market Impact and Outlook

• Impact of Policy Rate Cut: Estimated 5.1% pressure on net profit due to a 25bp rate cut. However, KTB’s exposure to fixed-rate retail loans (46%) may mitigate the impact compared to other large banks with a higher proportion of corporate loans.
• Focus on Asset Quality: KTB plans to maintain a high coverage ratio to buffer against economic uncertainties.

Earnings Forecasts

• Revised Net Profit Forecasts for 2024-2026:
  • 2024: Bt44,390 million
  • 2025: Bt44,903 million
  • 2026: Bt47,399 million
• Percentage Changes: 0.7% for 2024, -0.8% for 2025, and -0.1% for 2026.

Valuation and Recommendation

• Recommendation: Maintain BUY rating.
• New Target Price: Bt25.00, calculated using the Gordon Growth Model (cost of equity: 11%, long-term growth: 2%).
• Implied P/B for 2025F: 0.74x, which is +2.5 standard deviations above its historical five-year mean.

Key Financials

• Net Interest Income:
  • 2022: Bt90,405 million
  • 2023: Bt113,419 million
  • 2024F: Bt118,211 million
• Net Profit:
  • 2022: Bt33,698 million
  • 2023: Bt36,616 million
  • 2024F: Bt44,390 million
• EPS (Bt):
  • 2022: 2.4
  • 2023: 2.6
  • 2024F: 3.2

Share Price Catalysts

• Expected economic recovery that could improve asset quality and overall financial performance.

Environmental, Social, and Governance (ESG) Initiatives

• Environmental Goals: Long-term target to reduce greenhouse gas emissions by 30% by 2030, with a 3% reduction target for 2024.
• Social Responsibility: Emphasis on equal employment opportunities and community involvement.

This comprehensive summary provides a clear and organized view of the key details concerning Krung Thai Bank (KTB TB) from the provided PDF.