Maybank Reaffirms Positive View on Thai Banking Sector Following Strong 1Q22 Earnings

As most of Thailand’s banks reported improved performance in 1Q22, Maybank Securities (Thailand) (MST) reaffirmed its positive sector view, forecasting the sector to outperform the SET.

Sector earnings rose 13% YoY and 24% QoQ to THB44.3 billion due to lower credit cost in 1Q22. Kiatnakin Phatra Bank Plc. (SET: KKP) and Krung Thai Bank Plc. (SET: KTB) showed impressive earnings growth of 41% and 57% YoY, respectively, with improving asset quality and lower credit cost. Sector PPoP was relatively flat YoY while KKP and KTB reported 20% and 9% YoY growth, thanks to strong loan growth and lower cost-to-income ratios. Sector loans grew 6.7% YoY and 0.9% QoQ. NPL ratio fell 4bps QoQ to 4.0%, credit cost fell to 1.21% in 1Q22 from 1.87%/1.55% in FY20/21.

Following an impressive earnings growth, KTB is now added to the top BUYs along with Kasikornbank Plc. (SET: KBANK) and KKP. 

MST sees a buying opportunity in KTB after it posted 1Q22 net profit of THB8.8 billion, jumped 57% YoY and 78% QoQ, thanks to lower opex and credit cost likely to stay at 1.0% in FY22E from 1.35-2.0% in FY20-21. PPoP also rose 9% YoY and 15% QoQ. MST raised its FY22-23E earnings by 26-27% on lower credit cost and expected earnings to grow 35% YoY vs the sector average of 14% this year.

Banks Rating Target Price
Kasikornbank (SET: KBANK) BUY THB185.00
Siam Commercial Bank (SET: SCB) BUY THB140.00
Bangkok Bank (SET: BBL) BUY THB165.00
Krung Thai Bank (SET: KTB) BUY THB18.00
TMBThanachart Bank (SET: TTB) HOLD THB1.45
TISCO Financial (SET: TISCO) BUY THB110.00
Kiatnakin Bank (SET: KKP) BUY THB88.00