Bangkok Bank Says Full-Year Profit Growth to Stall
Bangkok Bank Pcl, Thailand's biggest financial-services company, said profit growth has stalled after a military coup sapped consumer and business confidence.
``We expect profit this year to be along the same basis with what we have seen in 2006,'' Chartsiri Sophonpanich, 48, the bank's president, said in a June 25 interview in Bangkok. ``Confidence is low, but there has been some slight improvement with the announcement of the election timing by the end of this year.''
Full-year profit for 2006 was 17.8 billion baht ($516 million), down 12 percent from 2005, according to data compiled by Bloomberg. Revenue is expected to grow ``moderately'' in the second half, Chartsiri said.
Bangkok Bank and its competitors have cut deposit and lending rates several times this year to reduce funding costs and boost new loans as business confidence slumps to an eight- year low. The military-installed government, which is increasing spending to revive economic growth, said earlier this month it may hold elections before December.
``Loan growth should improve in the second half as the government will speed up spending,'' said Kasem Prunratanamala, Bangkok-based head of research at CIMB-GK Securities Pte. Bangkok Bank's ``loan growth has been slower than sector average, but 5 percent this year will be on par. We expect 7 percent next year,'' he said.
Bangkok Bank's shares have performed worse this year than seven of its competitors', rising 6.3 percent, compared with a 14 percent gain in the benchmark Bangkok SET Index. The shares today rose one baht, or 0.86 percent, to 117 baht at the 12:30 p.m. trading break in Bangkok.
Investment Boost
Chartsiri said the pickup in government contracts will help boost investment and loan growth in the second half. Growth ``should remain strong'' in the medium and long term, he said.
Profit will be about the same ``despite the higher level of tax'' Bangkok Bank will pay this year, because of the expected ``moderate growth'' in revenue, Chartsiri said.
Tax waivers, granted to banks after the Asian financial crisis, expired last year, forcing Bangkok Bank and most competitors to again pay 30 percent of profits to the government.
Net income in the fourth quarter of last year, the bank's first earnings after the coup, rose to 4.05 billion baht, up 3.4 percent from the previous quarter, according to Bloomberg data.
Falling Income
First-quarter 2007 net income of 4.63 billion baht was 11 percent lower than a year earlier. Krung Thai Bank Pcl, the second-biggest, earned 4.41 billion in the first quarter, 5.1 percent less than a year earlier.
Chartsiri was appointed president in 1994, according to the 63-year-old bank's Web site. His father, Chatri Sophonpanich, 73, led the company from 1980 to 1992 and remains chairman.
Bangkok Bank faces increasing competition as international financial-services companies buy stakes in smaller Thai banks, said Doug Barnett, an investment manager of the Thai Focused Equity Fund Ltd., a $325 million hedge fund.
Barnett owns more shares in Bank of Ayudhya Pcl than in Bangkok Bank because a unit of General Electric Co. owns a stake in Bank of Ayudhya.
``There used to be three or four big banks in Thailand; after '97 everybody and his dog including GE is here,'' Barnett said. ``There are really big players. They are better capitalized and they're much more focused on consumer banking.''
Economy Slows
Spending on new homes, cars and other products has stalled since the military ousted former Prime Minister Thaksin Shinawatra in September. Consumer confidence, after falling in 15 of the past 17 months, is at a five-year low.
Economic growth may slow to 3.8 percent this year, the weakest in six, the central bank forecasts. Annual expansion has averaged 5 percent since 1998.
Thailand's government this month lifted its fiscal 2008 deficit forecast by 38 percent to 165 billion baht as it boosts spending and tax receipts are cut by slowing consumption. The targeted shortfall for the year to Sept. 30 is 100 billion baht.
Among the projects to be started are power plants that will add as much as 4,000 megawatts of electricity supply between 2011 and 2013. Thailand has 26,000 megawatts of generating capacity.
Thailand will also build a 15-kilometer (9.3-mile) railway, the first of five mass transit projects in Bangkok, at a cost of 13 billion baht.
The economy grew an average 8.6 percent in the six years until 1997, when Thailand gave up a currency peg to the dollar that had overvalued the baht, triggering the financial crisis.
Last Updated: Fri, 29 Jun 2007 14:09:00
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