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 |
