BBL Jumps 3%, Analyst Recomm. “BUY” at ฿120 on Strong CAR-Lower Provision

The share price of BBL as of 12:29 local in Thailand rose ฿2.75/share or 2.93% to ฿96.75/share with a trading value of 696 million baht. 

 

Bangkok Bank Public Company Limited (BBL) is expected to offer a dividend payment at the rate of ฿2.50/share for FY2020 and ฿3.0/share for FY2021. Analysts saw the Capital Adequacy Ratio (CAR) at 16.6% is still manageable, expecting a profit growth in 4Q20 to outperform peers due to lower provision and bad debt shown in 3Q. Thus, giving a “BUY” recommendation at a target price of ฿120.00/share.

 

KGI Securities (KGI) stated that after raising perpetual bonds last month, BBL boosted Tier I to 15.1% (from 14% in 2Q20), and CAR to 16.6%. This CAR would enable the bank to pay a dividend. Assuming a lower dividend payout of 25% (from 38%), KGI assumed a dividend payout of ฿2.5/฿3.0 per share in 2020/2021. Applying PBV at 0.5x (same as other big banks), KGI reached a new target price of ฿120/share, down from ฿135/share.

 

Guidance from BBL’s management indicates that its operation will remain vulnerable due to borrowers’ financial status and recovery will take longer in 2H21. Although BBL has low exposure to the debt relief program, the bank remains cautious and sets a huge provisioning expense. KGI cut 2020/2021 earnings by 3%/19%, mainly reflecting higher credit cost.

 

KTB (Thailand) Securities (KTBST) expected a profit growth in 4Q20 and was neutral toward the guidance from BBL’s management. Seeing the bank’s bad debt at less risk compared to other commercial banks because there was only around 5% of its total loan was in the debt relief program, thus setting aside lower provision in 4Q20. KTBST estimated BBL’s profit in 4Q20 to outperform peers, giving a target price of ฿110/share.