The analysis department of Asia Plus Securities (ASPS) expects the eight commercial banks it covers to report a combined net profit of 54 billion baht in the first quarter of 2023, up 34% from three months earlier thanks to net interest income (NII) growth and reduced operating costs.
The first-quarter net profit of the eight banks is projected to increase 5% year-on-year, said the brokerage.
While interest rates are not expected to dip and enter a downward trend this year, the NII of commercial banks would expand in line with economic growth. The current price-to-book value (P/BV) ratio, meanwhile, is not expensive at 0.67 times, ASPS explained.
Based on the quality of assets, ASPS recommends the share prices for Bangkok Bank (BBL) at 174 baht, 132 baht for Siam Commercial Bank (SCB), 159 baht for Kasikornbank (KBank) and 20.3 baht for Krungthai Bank (KTB). For smaller banks, it targets 108 baht for Tisco Financial Group and 77 baht for Kiatnakin Phatra Bank (KKP).
Banks are scheduled to submit financial statements for the first quarter from April 18, starting with Tisco Bank, while large banks such as KBank and SCB are expected to report on April 21.
Bloomberg Consensus reported as of April 6, if the first-quarter net profit of banks is lower than 25% of the profit estimates for all of 2023, there is an opportunity for Bloomberg to lower the earnings forecast for the whole year.
Meanwhile, if the first-quarter net profit is more than 30% of the all-year target, there will be an upgrading for the all-year projection.
In a related development, Krungthai Compass anticipates the Bank of Thailand's Monetary Policy Committee will continue hiking interest rates by lifting the rate by another 0.25% to 2% at its next meeting in May.
The increase is intended to deal with the continuing high price pressure. While the prices of fresh food, such as meat, eggs and dairy products decreased, core inflation still rose 1.75% year-on-year, according to the think tank.
Energy prices added pressure to inflation after the Opec+ meeting earlier this month resolved to cut oil output by approximately 1.66 million barrels per day. As a result, Dubai crude prices shot up by about 7%, affecting domestic retail prices, especially gasoline.
Businesses tend to gradually raise the prices of their products in the basic category to pass the burden of rising costs to consumers. Additionally, if the Thai economy recovers strongly, it would further push up core inflation, Krungthai Compass acknowledged.