Keep Eyes on KBANK after Announcing Stock Buybacks Higher than Market Price-Div at ฿4.50

Kasikornbank Public Company Limited (KBANK) has announced a share repurchase program for financial management purposes as well as a resolution to pay a dividend.

 

With its lower share price, KBANK prepares to use its excess liquidity to repurchase 23,932,601 shares in an amount not exceeding Baht 4,600 million, assuring its strong capital fund and sufficient liquidity to support its long-term business, and announces its concurrence with the dividend payment from 2019 operating results at the rate of Baht 5.00 per share, up from that of the previous year at Baht 4.00 per share.

Mr. Banthoon Lamsam, Chairman of the Board of KASIKORNBANK revealed that the Board of Directors resolved to approve the share repurchase project in order to manage its liquidity for the utmost benefits of the Bank and its shareholders with the number of shares to be repurchased not exceeding 23.93 million shares or equal to the amount of not exceeding 1% of the total paid-up capital of the Bank and in an amount not exceeding Baht 4,600 million.

The share repurchase will be conducted for a period of 10 consecutive business days, during February 14, 2020 to February 27, 2020. The repurchase price must not exceed the average closing price in the period of 5 consecutive business days prior to each repurchase date plus 15% of such average closing price. In this regard, the shares will be repurchased using the cash from the Bank’s internal liquidity.

During this period, the price of the majority shares in the Stock Exchange of Thailand, including ones in the commercial banking sector, has fallen continuously. In the meantime, KASIKORNBANK also has a Capital Adequacy Ratio (CAR) at 19.62%, which is sufficiently sturdy to support the implementation of the Bank’s strategic plans and businesses, BASEL IV, and factors with potential future impacts.

Moreover, the Bank still has sufficient financial liquidity with unappropriated retained earnings of up to Baht 299,217 million. This share repurchase project will result in the decrease of the Bank’s liquid assets and book value of the shareholder’s equity, and enable the Bank to maximize the efficiency of its excess liquidity and capital management.

At the end of the project where the Bank can repurchase all of the shares as specified, the Bank’s liquid assets and book value of the shareholder’s equity would be lowered by the amount equivalent to the repurchased amount, which will result in the increasing of the Return on Equity (ROE) ratio and the Earning per Share (EPS) ratio.

Nevertheless, after the repurchase of the shares, the Board of Directors may resell the repurchased shares through the Stock Exchange of Thailand or by conducting the Public Offering depending on the appropriateness of the situation during that time, where the Board of Directors will determine the procedures and inform investors later.

In this regard, the period for the resale of shares will be after 6 months from the completion date of share repurchase and not later than 3 years from such completion in accordance with relevant rules and regulations.

Moreover, the Board of Directors resolved to concur with the dividend payment from 2019 operating results to its ordinary shareholders at the rate of Baht 5.00 per share, of which the Bank paid interim dividend at the rate of Baht 0.50 per share on September 26, 2019, therefore the Bank will pay the remaining dividend at the rate of Baht 4.50 per share to the shareholders, by setting the record date on April 10, 2020 to determine the list of shareholders entitled to receive dividend.  The dividend payment will be further proposed to the Annual General Meeting of the Shareholders for approval and such dividend shall be paid to the shareholders on April 30, 2020.Last year, the Bank paid dividends at the rate of Baht 4.00 per share.

 

After the report, it has been speculated that KBANK’s repurchase program for 23,932,601 shares in an amount not exceeding Baht 4,600 million, will have an average purchasing price at ฿192.20/share, which is higher than the price being traded on the closing of morning session on January 30, 2020, at ฿132.50/share.