KGI Maintains “Overweight” on Banking Sector as Economy Recovers, Rates Rise

Thailand’s economy is still on the road to recovery, thanks to solid income from international tourists. This should benefit the banking sector, which needs to have manageable assets as interest rates go up.

KGI Securities raised their target prices for Thailand’s “big seven” banks (KTB, KBANK, BBL, SCB, TTB, TISCO, and KKP) in light of the country’s improving economy and rising interest rates, with a particular emphasis on KTB and BBL due to their expected lower volatility.

KGI considers the uneven economic recovery to be a bumpy rebound in bank operations, depending on the rate at which policy rates are raised. Banks with conservative asset quality, such as Krung Thai Bank (SET: KTB) and Bangkok Bank (SET: BBL), will be less volatile, whereas Kasikornbank (SET: KBANK), will be more vulnerable. KGI maintains an Overweight rating on the sector, favoring conservative banks like KTB and those with a high capability to grab market share like KBANK and Kiatnakin Bank (SET: KKP). 

KGI raised the target price of BBL from THB155.00 to THB159.00, KBANK from THB188.00 to THB198.00, KKP from THB81.50 to THB86.70, SCB from THB150.00 to THB152.00, TISCO from THB104.00 to THB107.50, while KTB and TTB stay unchanged.