Thai Banks Expected to Benefit the Most from Rising Rates, Analyst Says

The Thai economy is anticipated to return to pre-pandemic levels by the end of this year or the beginning of next, with the central bank said on Wednesday to gradually raise interest rates in bid to contain inflation and ensure a smooth recovery.

On Wednesday, Governor of the Bank of Thailand (BOT) Sethaput Suthiwartnarueput projected 3% growth for the Thai economy this year and 4% growth for 2022

The Bank of Thailand, one of Asia’s least hawkish central banks, increased its key interest rate by a quarter point to 0.75% last month, the first hike in over 4 years. A further raise is predicted at the September 28 meeting, as inflation hit a 14-year high of 7.86% in August.


CGS-CIMB Securities believes that Thai banks, especially the larger ones like BBL and SCB, will gain from anticipated rate hikes.

Larger banks have more floating loans from corporations, SMEs, and mortgages, while mid-to-small banks have more hire-purchase loans with fixed interest rates.

The research group has therefore reaffirmed its “overweight” recommendation for the sector.

Bangkok Bank Pcl. (SET: BBL) and SCB X Pcl. (SET: SCB) are its top picks for large banks, while Kiatnakin Phatra Bank Pcl. (SET: KKP) is its top pick for small banks. 

It sees the Thai banking sector’s risk-reward profile as favorable, owing to stable earnings growth and increasing asset quality. This will come as Thailand’s economy progressively recovers, particularly in terms of tourism.

The analyst at CGS-CIMB also forecasts that banks’ ROE will increase from 6%-7% (in 2020-21) to over 8%-8% (in 2022-24).