Analyst Rates “Overweight” for Thai Banks on Expected NIM Improvement

KGI Securities maintained an “Overweight” rating on the Thai bank sector, while reiterated “Selective Buy” on Bangkok Bank (SET:BBL) and Krungthai Bank (SET:KTB) as banks should see improved NIMs after rising lending rates.

Bangkok Bank, Kasikornbank, and Siam Commercial Bank (SET:SCB) raised rates on MLR and MOR by 0.2% each, and MRR by 0.1% (except for BBL which raised MRR by 0.15%). Meanwhile, they raised fixed deposit rates by 0.1-0.25%, KBANK and SCB maintained their deposit rates on CASA but BBL raised the rate for CASA by 0.05%. 

Although rising lending rates will benefit banks, the analyst believes the Bank of Thailand will put pressure on them to be more proactive in raising rates and may drive them to raise deposit rates for CASA (Current Account and Savings Account).

In 1Q23, NIMs should rise by roughly 20bps after accounting for the cost of deposit guarantees of +0.23bps and the NIM benefit from hiking lending rates by 40bps (with deposit rates unchanged).

While for the aforementioned major three banks, NIMs should improve by another 6-7 basis points following the recent rate hike.