KGI Securities has adopted a more optimistic view of Thailand’s non-bank sector, pointing to a combination of falling funding costs, resilient asset quality, and a raft of anticipated government measures that could buoy both borrowers and lenders.
The brokerage firm expects that aggressive interest rate reductions will materially lower borrowing costs for non-bank financial firms in the second half of 2025 and into 2026. Asset quality concerns have also eased, with credit costs seen as having already peaked.
The arrival of a new Cabinet and Prime Minister is expected to usher in populist policies—such as a loan moratorium for the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC)—that will indirectly support non-banks by improving debt repayment capabilities across the economy.
Fresh injections of state funds and stimulus programs, including the ‘Khon La Krueng’ or the ‘Half-Half co-payment’ campaign, should further boost grassroots spending and act as multipliers for economic activity.
KGI noted that since rate cuts began in mid-2024, non-banks have only seen modest funding cost declines—around 15 basis points for Muangthai Capital (SET: MTC), Srisawad Corporation (SET: SAWAD), and Tidlor Holdings (SET: TIDLOR), and about 10 basis points for Krungthai Card (SET: KTC) and Aeon Thana Sinsap (SET: AEONTS).
However, the analyst expects a sharper reduction ahead as firms refinance and reprice debt at lower rates, with cost of funds forecast to drop by 30bps for SAWAD, 40bps for MTC, and 50bps for TIDLOR next year. This should drive profit upgrades of 4% for SAWAD, 5% for TIDLOR, and 5.5% for MTC in 2026.
Regulation remains a factor for the industry, with the Bank of Thailand keeping a close eye on lending practices to ensure fairness. Caps on interest rates will likely limit loan yield upside at leading non-banks like MTC and SAWAD. Still, earnings can improve as these companies shift towards higher-margin, unsecured nanofinance loans, which allow rates up to 33%.
Reflecting these dynamics, KGI has upgraded SAWAD to ‘Outperform,’ raising its price-to-earnings (PE) ratio target to 10.5x and its 2026 price target to THB 33.50. A similar upgrade moves MTC to ‘Neutral,’ with a higher PE target of 12.5x and a 2026 price target of THB 46.00. TIDLOR’s ‘Outperform’ rating is maintained, but its price target is lifted to THB 22.70 for 2026.
