Bank stocks slide at concern over bad debt, weak performance

[rooster59]

Bank stocks slide at concern over bad debt, weak performance

By The Nation

 

 

Bank stocks have dropped an average 6.2 per cent over the past week as the virus crisis grips Thailand’s financial sector, experts reported today.

 

 

Meanwhile the Stock Exchange of Thailand (SET) fell by 4.1 per cent from 1359.65 to a low of 1,303.25 before rebounding to 1,328.53 at the close on Friday (July 31).

 

Pasakorn Wangvivatchareon, a research assistant at Asia Plus Securities, said the fall in banking shares was due to banks’ weak second-quarter performance, allowance for doubtful debts, and lack of positive sentiment.

 

"Banks' asset quality is likely to deteriorate further after the Bank of Thailand [BOT]'s debt payment holiday expires, while market volatility and the BOT’s move to hold off payment of banks’ interim dividends would also pressure the share price," he said.

 

However, he said banking stocks would not drop sharply because banks' price-to-book value was already at a low of 0.4.

 

"Signs of economic recovery will lift the price of bank shares," he said. "However, we still weigh investment in banks lower than the market due to various uncertainties."

 

Meanwhile, a Tisco Securities stock analyst advised investors to monitor banks' move to set up allowances for doubtful debts as this would affect their performance in the second half of this year.

 

"Banks that have set up allowances in advance are Bangkok Bank (BBL) and Kasikorn Bank [KBank], while those gradually setting up allowances are Siam Commercial Bank [SCB] and TMB Bank," the analyst explained.

 

Most banks expected up to 40 per cent non-performing loans (NPL), the analyst said.

Small and medium enterprises under BOT relief measures accounted for about 40 per cent of total loans.

 

"We expect NPLs to reach the maximum by the second half of 2021," the analyst added.

 

KBank’s board of directors recently approved the sale of 23.932 million stocks it bought back earlier this year at Bt134 apiece, paying Bt3.207 billion. The bank looks set to lose about 38 per cent on that deal, given its July 30 share price of Bt82.50, when it offers the shares from August 31 to September 16.

 

"If we cannot sell stocks, the bank's capital funds are still sufficient to continue business," Chongrak Rattanapian, KBank senior executive vice president, said. "At present, the bank's capital funds at the end of June this year were 18.09 per cent of which 15.38 per cent was tier 1 capital. The bank's loans to deposit ratio [LDR] was 92.15 per cent."

 

Source: https://www.nationthailand.com/business/30392251

 

-- © Copyright The Nation Thailand 2020-08-01

 

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[trainman34014]

Baht not doing a lot of 'sliding' though is it !

[RichardColeman]

 

6 hours ago, rooster59 said:

KBank’s board of directors recently approved the sale of 23.932 million stocks it bought back earlier this year at Bt134 apiece, paying Bt3.207 billion. The bank looks set to lose about 38 per cent on that deal, given its July 30 share price of Bt82.50, when it offers the shares from August 31 to September 16.

So, bank will lose about 1.2 billion baht ? Bet someone earns big and gets a big promotion after that debarcle. Sounds a real inside job to me

[Cake Monster]

7 hours ago, rooster59 said:

Most banks expected up to 40 per cent non-performing loans (NPL), the analyst said.

Small and medium enterprises under BOT relief measures accounted for about 40 per cent of total loans.

 

"We expect NPLs to reach the maximum by the second half of 2021," the analyst added.

Bloody Hell !.

Thats an absolutely insane amount of NPL Loans.

And the Analyst also said that the Quality of Assets will also deteriorate further after the payment Holiday expires.

Gonna be a rough ride as they say

[Leaver]

8 hours ago, Cake Monster said:

Bloody Hell !.

Thats an absolutely insane amount of NPL Loans.

And the Analyst also said that the Quality of Assets will also deteriorate further after the payment Holiday expires.

Gonna be a rough ride as they say

Yes, but don't worry.  Your 800k for next years's visa is safe.  No, really, it is.  ????

 

I'm wondering if Thai Immigration are going to recognise deposits that have been "seized" for a Thai bank bail-in as ok for for a visa extension.   

[Redline]

40 percent NPLs is very bad, and expected to get worse by mid 2021 ???? so, how can they survive?

The bank wants to give us a 900,000 baht discount, if we pay off our mortgage by December 

Edited August 1, 2020 by Redline

[sammieuk1]

Sure there is a minister for covering up huge losses that will be along to tell everything is fine and 40% is realy 4% very soon????

[jabis]

20 hours ago, rooster59 said:

KBank’s board of directors recently approved the sale of 23.932 million stocks it bought back earlier this year at Bt134 apiece, paying Bt3.207 billion. The bank looks set to lose about 38 per cent on that deal, given its July 30 share price of Bt82.50, when it offers the shares from August 31 to September 16.

Quite a bunch of monkeys, don't'cha think 

[jabis]

1 hour ago, Redline said:

40 percent NPLs is very bad, and expected to get worse by mid 2021 ???? so, how can they survive?

The bank wants to give us a 900,000 baht discount, if we pay off our mortgage by December 

It starts with tax and ends with payer -of course x)

EDIT: depending how big your mortgage is - give it a few months for them to up the ante and enjoy ????

Edited August 1, 2020 by jabis

[lamyai3]

15 hours ago, trainman34014 said:

Baht not doing a lot of 'sliding' though is it !

YMMV, but the pound increased 8% against the baht in July, and ended the month at a three month high. 

[BritManToo]

58 minutes ago, lamyai3 said:

YMMV, but the pound increased 8% against the baht in July, and ended the month at a three month high. 

When the Baht is sinking faster than the Pound ....... you know they're in trouble!

I can't help thinking 40% NPL must be a typo ....... nearly half the loans in a country in default can't possibly happen .... can it?

[englishoak]

1 hour ago, BritManToo said:

When the Baht is sinking faster than the Pound ....... you know they're in trouble!

I can't help thinking 40% NPL must be a typo ....... nearly half the loans in a country in default can't possibly happen .... can it?

Given  the word unprecedented is being used almost weekly around the world atm, just because a loan default of such a magnitude has never happened before dosnt mean it cant.

 

2021 is going to bring the pain of reality that is being hidden atm by loan holidays. Thailand isnt likely to be the only one exposed to large amounts of NPL either...

 

Interesting times ahead. 

 

[hotchilli]

20 hours ago, trainman34014 said:

Baht not doing a lot of 'sliding' though is it !

Never will, it's as teflon coated as someone else we could mention.

[Cake Monster]

10 hours ago, BritManToo said:

When the Baht is sinking faster than the Pound ....... you know they're in trouble!

I can't help thinking 40% NPL must be a typo ....... nearly half the loans in a country in default can't possibly happen .... can it?

And the Loans are currently running at 80% of the Thai GDP.

The prospect of 40% NPL is really spooky

[Leaver]

17 hours ago, BritManToo said:

I can't help thinking 40% NPL must be a typo ....... nearly half the loans in a country in default can't possibly happen .... can it?

Why can't it?  

 

Perhaps the banks got greedy, and tourism is a huge source of employment.  

 

The tourism sector is finished for the foreseeable future, so there's a lot of defaults from employees from that sector alone.  Then, there are other effected sectors like aviation and agriculture, not to mention Thailand was losing some of its manufacturing industry.  

 

The above can have a domino effect.