KKP Securities Solely Downgrades KBANK on Potential High Provisions, Cutting TP to THB129

KBANK reported a solid performance in the third quarter of this year, compared to the third quarter of last year, but still slightly underperforming its record in the second quarter.

Kasikornbank Public Company Limited (SET: KBANK) reported a net profit of Baht 10,573 million in 3Q22, increased 22.52% from a net profit of Baht 8,630 million in 3Q21, but dropped slightly from the previous quarter by 2.04%. All segments performed well in the quarter when compared to the same quarter last year due to a recovery of the tourism sector and domestic spending.

Expected credit loss remained at a higher level in the third quarter at Baht 9,978 million, a slight increase by less than 1% from Baht 9,852 million in 2Q22. Still, the figure in the third quarter was lower than those in the same period last year of Baht 11,296 million.


Kiatnakin Phatra Securities (KKPS) is the only firm coming out and downgraded KBANK amid all “BUY” recommendations from analysts in the market.

KKPS downgraded KBANK from “Neutral” to “Underperform” on management’s new tone for a potential increase of credit cost in 4Q22 and 2023. 4Q22 earnings were expected to fall YoY and QoQ from higher provisions.

The firm also lowered its earnings estimates by 16% and 17% for 2023-24, respectively, on the rising provisioning ratio from 148-149bps to 165bps.

KKPS lowered its DDM-derived PO by 18% from THB156 to THB129 and also lowered terminal growth to 3.3% from 3.7%. Dividend yield is expected to rise to 4.90% in 2022, to fall to 3.66% in 2023 before bouncing back to 3.86% in 2024.


In contrast to KKPS, Innovest Securities, a subsidiary of SCB, maintained “Outperform” rating, but cut target price to THB173 (0.75x PBV for 2023) from THB176 but keep Outperform rating on the back of 1) attractive valuation, 2) expectation of good earnings recovery in 2023 after a big balance sheet cleanup in 2022 and 3) its lead position to benefit from up-trending interest rates. Innovest expected 4Q22 earnings to fall both YoY and QoQ due to higher provisions.


DAOL Securities (DAOL) maintained a BUY call on KBANK and roll forward its valuation base to 2023E, resulting in its target price rising to THB195.00 from THB190.00 but target PBV staying unchanged at 0.85x, which is -1.0 SD below its 10-yr average.

DAOL maintained 2022E net profit forecast at THB42.0bn, which indicates an +11% increase, with 9M22 representing 77%. In 4Q22E, DAOL expected net profit to grow YoY in expectation of lower loan-loss provision but to decline QoQ on seasonally higher opex. KBANK has outperformed the SET Index by 1% in the past three months in response to an interest rate hike era. The stock currently trades at an undemanding PBV of 0.72x, which is -1.25 SD below its 10-yr average and well below its major rival SCB of 0.81x.


KGI Securities stated that KBANK’s 3Q22 earnings were 5% below its estimate, while 9M22 earnings accounted for 81% of the full-year forecast, indicating no downward revision to the earnings forecast. However, management turns bearish view and has guided for derailed growth in loans and fee income, while credit cost could be higher than targeted. Hence, KGI took a less bullish toward the bank and de-rate PBV multiple to 0.85x (down from 0.95x). KGI’s new 2023 target price is THB188, from THB198. KGI maintained a rating of Outperform on the counter.


Maybank Securities (Thailand) (MST) expected KBANK’s insurance business and NIM should gradually improve as interest rates rise. This should help support top line growth and more than offset the higher credit cost from rising problem loans in 4Q22. KBANK is likely to grow high-yield unsecured loans to increase revenue, and speed up NPL resolution to clean up its balance sheet, in MST’s view. BUY with a target price of THB185.