Bank - 4Q24 Review: lower NIM, credit cost

KITTIMA SATTAYAPAN, IAA, CFA

28 Jan 2025, 07:59

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Banks will find sustaining earnings challenging in 2025 amidst the interest rate downtrend and the potentially slower GDP growth.
We expect modest earnings growth in 2025 with lower credit cost offset by narrowed NIM, plus sluggish growth in loans and non-NII.

In 4Q24, the sector’s earnings fell 8% QoQ on seasonality but rose 8% YoY, slightly better than INVX and consensus forecasts.
The largest beat was at KKP, on FVTPL gain.
BAY was the only bank whose earnings missed expectations and this was on lower-than-expected NII.
BBL had the best set of results with a substantial fall in NPLs and solid NIM expansion.
On a QoQ basis, overall 4Q24 results reflected: 1) lower credit cost at most banks with slowed NPL inflow, 2) a squeeze in NIM after a cut in policy rate and in lending interest rate, 3) a seasonal pickup in loans, 4) higher non-NII with a seasonal pickup in fee income and 5) seasonally higher cost to income ratio.