Tisco Securities projects a notable decline in Thai banking sector earnings for the fourth quarter of 2025, forecasting an aggregated net profit of 53.8 billion baht for the seven major banks under its coverage. This marks a 22% decrease quarter-on-quarter and a 5% drop year-on-year, primarily due to the absence of extra investment gains from government bonds which had buoyed profits in previous quarters.
According to Tisco, the 10-year government bond yield rose to 1.65% by quarter-end from 1.42% previously, causing gains on investment to normalize from 9.7 billion baht last quarter to less than 1 billion baht this period. While fair value through profit or loss (FVTPL) could still contribute, the value is expected to soften amid broader asset price declines in both equity and fixed-income markets.
Other topline pressures are also in play. Interest income is forecasted to remain under pressure, reflecting the full impact of August’s policy rate cut and another trim in December, resulting in a likely 9 basis-point narrowing of net interest margin (NIM). Loan growth is expected to contract by 2.9% year-on-year, held back by ongoing economic sluggishness and high credit risk. Fee income, however, is projected to rise 7% year-on-year, powered by robust performance in wealth management. Operating expenses are set to increase by just 1% as banks implement cost control measures. Non-performing loan (NPL) ratios are forecasted to remain stable at 3.82%, aided by restructuring efforts.
Given these developments, Tisco warns the upcoming results may trigger a sector rotation, with banking stocks—recent outperformers thanks to strong earnings and capital management—potentially seeing investors shift to lagging sectors as profitability crests.
Tisco maintains a BUY rating on KTB (TP 26.00 baht) and TTB (TP 2.20 baht). The firm rates BAY (TP 23.70 baht), BBL (TP 160 baht), KBANK (TP 150 baht), KKP (TP 50.00 baht), and SCB (TP 120.00 baht) as HOLD.
