BAY - 4Q24: Miss on NII

4Q24: Miss on NII. BAY reported 4Q24 net profit of Bt6.28bn (-18% QoQ, -19% YoY), 11% below our estimates, on lower NII.

Highlights:

• Asset quality: NPLs decreased 1% QoQ (+15%, if write-offs and NPL sales are added back). Credit cost eased 8 bps QoQ (-37 bps YoY) to 2.2%. LLR coverage was stable at 121%.
• Loan growth: -1.6% QoQ, -6% YoY, worse than anticipated.
• NIM: Worse than expected, -23 bps QoQ on an 18 bps QoQ fall in yield on earning assets and an 8 bps QoQ ease in cost of funds.
• Non-NII: +9% QoQ (-4% YoY). Net fee income rose 2% QoQ (-9% YoY).
• Cost to income ratio: +184 bps QoQ (131 bps YoY) to 46.97%. Opex rose 1% QoQ (-8% YoY).

2025 earnings outlook. We cut our 2025F by 6%, adjusting NIM, which gives a fall in earnings of 3% in 2025F, with 1% loan growth, a 15 bps narrowing in NIM, 3% growth in non-NII, a 14 bps reduction in credit cost and rising cost to income ratio.

Maintain Neutral with a cut in TP. We maintain our Neutral rating with a cut in TP to Bt25 (0.45x 2025F BVPS) from Bt29.

Key risks: 1) Asset quality risk from an uneven economic recovery,
2) slower loan growth than expected from sluggish loan demand,
and 3) ESG risk from market conduct and cyber security.