We have raised our coverage (eight banks) 2022 aggregate profit forecast by 1.8% to Bt195.8bn (up 9% YoY), as we have upsized our lending growth assumptions (the NESDC’s GDP growth projection is fairly bullish). Moreover, we expect the effect of NIM squeeze to be mitigated by a greater yield on average assets. Our OVERWEIGHT sector weighting stands. BBL and KKP are our top picks.
Loan growth will rise as economic recovery builds steam
Previously, we conservatively assumed mean Bank coverage loan growth of 3.6% for 2022, but we now assume 4.4%, supported by solid GDP expansion (the National Economic & Social Development Council now forecasts real GDP growth in the 3.5-4.5% range, but we have pegged our loan growth assumption to GDP growth of only 3.0%). The Thai economy should expand robustly this year, despite the Russia-Ukraine war, driven by economic reopening, rising exports, and a recovering tourism industry. Note that the historical 2002-21 record shows that loan growth has typically been about 1.16x nominal GDP growth.