Kiatnakin Phatra Securities’ latest earnings preview for Thai banks projects stable headline profit, buoyed by investment gains, even as core operating figures show signs of pressure. Aggregate net profit for the six major banks under coverage is forecast at THB 53.3 billion for the quarter—essentially flat year-on-year (YoY) but down 3% quarter-on-quarter (QoQ). The report highlights exceptional returns from mark-to-market (MTM) and investment gains, particularly from bond holdings and stakes in Vayu 1 and Thai Airways (THAI). KTB and TISCO are expected to particularly benefit from their THAI investments.
Despite the fact that these windfalls are largely offset by increased provisions, resulting in muted core results, KTB is expected to stand out, with projected quarterly profit of THB 12.7 billion (+14% YoY, +14% QoQ). Meanwhile, SCB is also likely to post modest YoY profit growth after an absence of one-off losses seen in the previous year. By contrast, BBL and KBANK face YoY profit declines due to higher base last year for BBL and higher operating costs for KBANK.
A closer look at underlying profitability reveals further strain. Deducting investment-related gains, core pre-provisioning operating profit (PPOP) is forecast to decline 14% YoY and 8% QoQ, totalling THB 84.8 billion. The decline is attributed to contracting net interest margins (NIM)—expected to shrink by 38 basis points YoY and 10 basis points QoQ after August’s lending rate cut—and subdued loan growth, with negative trends noted both YoY and QoQ. Loan-related fees are also down from last year, while expenses have risen seasonally. Among the group, TISCO is set to deliver the most robust core performance, buoyed by steady loan growth and resilient NIM.
On the asset quality front, reported non-performing loans (NPLs) are forecast to reach THB 436 billion, a marginal rise of 0.1% YoY and 1% QoQ. While the NPL ratio is expected to edge up to 3.77%, the sector’s risk profile remains manageable, given cautious lending and ongoing debt restructuring since 2023. Provisions are expected to increase slightly as banks bolster countercyclical buffers for future credit stress.
Despite a less eventful earnings season for Thai banks, Kiatnakin Phatra Securities reiterates its neutral view on the sector, favoring SCB and TISCO for their resilient earnings and attractive dividend yields (8% and 7%+, respectively). KTB also earns a ‘Buy’ rating due to its strong provision coverage and rising dividends.
