Banks' net profits for the fourth quarter of 2006 are expected to slump sharply both year on year and quarter on quarter, due to higher provisions under the International Accounting Standard 39 (IAS 39).

KGI Securities (Thailand) forecast that seven banks under its coverage would post a combined fourth-quarter net loss of Bt2.81 billion, down 117.1 per cent year on year and 113.6 per cent quarter on quarter.

Those banks are Bangkok Bank, Krung Thai Bank, Siam Commercial Bank, Kasikornbank, TMB Bank, Bank of Ayudhya and Siam City Bank. The broker said that even though the Bank of Thailand was allowing banks gradually to set aside additional provision under IAS 39 in three phases through to the end of this year, most banks in its coverage had been expected to do so in last year's fourth quarter.

The broker estimated that these seven banks would have set aside provisions of Bt32.84 billion in last year's fourth quarter, compared with Bt8.85 billion in the same period of 2005 and Bt6.81 billion in the previous quarter.

TMB Bank was expected to have set aside the biggest provision among its industry peers in the final quarter of 2006: Bt14.01 billion.

Based on the estimate, the broker predicted TMB Bank would swing back into a net loss of Bt12.52 billion in the fourth quarter, slumping 879.5 per cent year on year and 1,704 per cent quarter on quarter.

That bank is expected to be the worst performer among its peers, with a net loss of Bt7.91 billion last year, compared with a net profit of Bt7.8 billion in 2005.

Bank of Ayudhya is expected to show a fourth-quarter net loss of Bt1.48 billion, compared with a Bt1.39-billion net profit in the same period in 2005 and a Bt1.87-billion net profit in last year's third quarter.

The bank's quarterly provisions are expected to show an increase, from Bt1.2 billion to Bt1.6 billion on average per quarter to Bt4.8 billion.

Its net profit for all of last year is expected to be Bt3.89 billion, down 35.3 per cent from 2005.

KGI Securities forecast that Bangkok Bank would be the best performer in last year's fourth quarter, with a net profit of Bt4.6 billion, up 17.5 per cent year on year and 8.6 per cent quarter on quarter.

However, the bank's 2006 net profit is expected to drop 9.35 per cent, from Bt20.31 billion in the previous year to Bt18.41 billion.

Kim Eng Securities (Thailand) was more optimistic and forecast that the seven banks would have a combined net profit of Bt1.18 billion in last year's fourth quarter, dropping 92.8 per cent on year and 94.25 per cent on quarter.

TMB Bank is expected to see a net loss of Bt7.04 billion in the fourth quarter of 2006, down 643.67 per cent quarter on quarter and 535.9 per cent year on year.

Bank of Ayudhya should show a net loss of Bt55 million, compared with a net profit of Bt1.87 billion in last year's third quarter and Bt1.39 billion in 2005's fourth quarter.

The broker forecast that Bangkok Bank would show the highest fourth-quarter net profit, at Bt3.39 billion, down 19.95 per cent on quarter and 13.4 per cent on year.

Kasikornbank is expected to be the second-best performer, with a fourth-quarter net profit of Bt2.93 billion, down 4.89 per cent quarter on quarter but up 10 per cent on year.

UOB Kay Hian Securities forecast that Bangkok Bank, Krung Thai Bank and Kasikornbank would report net profits for all of last year of Bt18.62 billion, Bt14.37 billion and Bt13.26 billion, respectively.