Maybank Securities (Thailand) has maintained its ‘Neutral’ stance on the Thai banking sector in 2026, as banks continue to face significant headwinds from a challenging macroeconomic environment and heightened geopolitical risks. The sector has underperformed the SET Index by 10% year-to-date, mainly due to concerns over the adverse effects of the ongoing Middle East conflict on economic and earnings recovery.
Bank earnings for the first quarter of 2026 are expected to come in weak, predominantly strained by compressing net interest margins (NIMs) and subdued loan growth. Maybank forecasts that the seven banks under its coverage will collectively post total 1Q26 earnings of THB 49.7 billion, marking a 15% year-on-year drop.
This setback is attributed primarily to lower NIM and non-interest income (non-NII), as recent lending rate reductions have placed pressure particularly on the larger banks’ margins. Revenue growth is expected to remain dampened, reflecting sluggish loan demand and soft performance in investment-related gains.
Despite the challenging revenue environment, the operating expenses are anticipated to remain stable year-on-year, as most banks are rigorously controlling costs to mitigate weak top-line momentum.
An exception among the group is Kiatnakin Phatra Bank (KKP), which Maybank expects to deliver the strongest earnings growth of 45% year-on-year in 1Q26. This performance is projected to be underpinned by robust capital market fee income and smaller losses on repossessed car sales. In contrast, most of the major banks are likely to report double-digit earnings contractions in the range of 13-22% year-on-year.
Overall sector credit provision is forecast to decline by 15% year-on-year, led by reductions at Krungthai Bank (KTB), Bangkok Bank (BBL), and TMBThanachart Bank (TTB), thanks to their front-loaded provisioning in the previous year. However, the non-performing loan (NPL) ratio is expected to edge up slightly by 5 basis points quarter-on-quarter to 3.71%.
Loan growth prospects for the sector remain fragile. Maybank warns that weakening asset quality, pressured by rising diesel and gasoline prices, will likely weigh more heavily from the second quarter onward. These cost pressures are reducing SME liquidity and household disposable income, prompting banks to adopt more stringent lending criteria in the face of a deteriorating outlook. As a result, Maybank sees downside risk to its 2026 loan growth estimate of 1.7%.
Despite the near-term earnings pressure, the sector’s dividend outlook remains a silver lining, offering attractive yields of 6-8%, which is expected to help cushion downside risk for investors.
Regarding stock recommendations and target prices, Maybank continues to favor BBL for its diversified income base and high earnings visibility, stemming from its robust loan-loss reserves. TTB is also highlighted as a top pick due to its proactive capital management strategy.
Following these, the brokerage has issued updated ratings for major Thai banks: KTB, BBL, TTB, KKP, and CREDIT are rated ‘Buy’ with target prices of THB 34.00, THB 180.00, THB 2.40, THB 77.00, and THB 29.00, respectively. SCB, KBANK, and TISCO are rated ‘Hold’, with target prices of THB 130.00, THB 185.00, and THB 108.00.
