Morgan Stanley has rated “Overweight” on Bangkok Bank Public Company Limited (SET: BBL) with a target price of THB 189, as the bank’s recent earnings release points to a likely share price increase in the coming 30 days. Despite the headline strength in the results being primarily attributed to mark-to-market (MTM) gains—labelled as “low quality” by the analyst—the data reveals resilience in the bank’s underlying operations.
Analysts note that while the bank’s positive earnings surprise was largely driven by MTM gains, key fundamental indicators show defensive characteristics. Net interest margin (NIM) compression came in at just 9 basis points quarter-on-quarter (QoQ), which is lower than that of its peers, underscoring more stable income generation from core lending activities in its defensive quality. This is despite net interest income (NII) being slightly softer, reflecting muted loan growth of -1% year-over-year (YoY), compared to the full-year forecast of 1.5% YoY growth.
Bangkok Bank’s cost-to-income ratio (CIR) improved, thanks to stronger revenues, and loan loss charges remained in line with expectations. Importantly, credit-impaired loans declined by 2% QoQ, bolstering confidence in the bank’s asset quality and risk management.
Valuation for BBL has lagged its sector peers in recent periods, but analysts expect a catch-up in the near term, supported by its stable trends in NIM and credit quality. The probability of the valuation catching up is estimated at 70% to 80%, classified as “very likely” by research analysts. These probability estimates are illustrative and based on the analysts’ subjective assessment of the scenario.
Additionally, no changes have been made to the full-year 2025 target, further indicating confidence in the ongoing trajectory of the bank’s fundamental performance.
