Equity Analysis /

Thailand: Bank - Strong lending growth outlooks; solid financial positions

  • 3Q22 earnings projected to rise 21% YoY but dip 3% QoQ

  • Profit forecast upgrades for 2023, led by higher lending rates

  • High Bank coverage Capital Adequacy Ratio

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
6 October 2022

Strong YoY loan growth in July and Aug and a lighter LLP outlook prompted us to forecast swift YoY profit expansion for 3Q22 and 2022. A rising interest rate environment will boost the NIMs and earnings of most banks in 2023. KBANK and BBL are our top picks.

3Q22 earnings projected to rise 21% YoY but dip 3% QoQ

Our models for the eight banks under coverage point to an aggregate 3Q22 profit of Bt49.8bn, up 21% YoY, driven by lighter LLPs (the average credit cost peg is assumed to have fallen from 161bps of loans in 3Q21 to 130bps in 3Q22), lending growth, and fatter NIMs (we estimate that the mean NIM fattened by 7bps YoY, due to high-yield lending biz growth). That growth is expected, even though we anticipate heavier OPEX (IT and equipment costs for maintaining core banking systems) and lower non-NII (diminished brokerage income). KTB, TTB, and KKP should mark the strongest YoY earnings expansion for 3Q22 of 45%, 35%, and 18%, respectively, driven by lighter LLPs and loan growth.