Earnings season begins with the banking sector as a some-what guideline to the overall economic outlook and how strong the financial sector has been in the first quarter of this year as Thailand is pushing the pace for recovery from the pandemic years with booming tourism that edging close to the pre-pandemic level.
According to Refinitiv, Thai commercial banks would see small growth of 7.5% when compared to the first quarter of last year with Bangkok Bank Public Company Limited (SET: BBL) and TMBThanachart Bank Public Company Limited (SET: TTB) leading the sector from double digit growth. Meanwhile, other banks would see a single digit growth and single digit contraction.
However, the consensus for a quarter-on-quarter growth pointed to a much stronger bottom line due to a surge from Kasikornbank Public Company Limited (SET: KBANK) by 240%, followed by SCB X Public Company Limited (SET: SCB) with nearly 50% profit growth.
| Target Price | 1Q22 Income | 4Q22 Income | 1Q23F Income | %YoY | %QoQ | |
| BAY | 35.75 | 7418.00 | 7391.35 | N/A | N/A | N/A |
| BBL | 182.34 | 7118.06 | 7569.47 | 9665.00 | 35.78 | 27.68 |
| KBANK | 170.34 | 11210.96 | 3190.80 | 10821.00 | -3.48 | 239.13 |
| KKP | 85.00 | 2055.35 | 1430.05 | 1907.00 | -7.22 | 33.35 |
| KTB | 19.31 | 8780.34 | 8109.18 | 8539.00 | -2.75 | 5.30 |
| SCB | 131.69 | 10193.00 | 7142.60 | 10591.75 | 3.91 | 48.29 |
| TISCO | 107.74 | 1795.49 | 1804.39 | 1817.00 | 1.20 | 0.70 |
| TTB | 1.54 | 3194.90 | 3847.32 | 4000.25 | 25.21 | 3.97 |
*Income unit in Million
Finansia Syrus Securities (FSS) stated by citing Bloomberg consensus that earnings of the Thai banking sector in 1Q23 are expected to grow 43% QoQ and 7% YoY. The strong growth on a quarterly basis is supported by KBANK’s performance from a significant decline in provisions, compared to its high level in the last quarter of 2022. FSS expected banks to record higher net interest margin (NIM) due to rate hikes in the second half of 2022.
FSS preferred BBL and KTB the most among the banking sector, seeing both stocks as the most beneficiary from rate hikes, while having strong loan quality and low valuation.
Kasikorn Securities (KS) also had a positive view on the banking sector on strong NIM at 3.05-3.17%, compared to 3.03% in 4Q22. The brokerage firm expected NIM in reach 3.20% in 2Q23 with borrowing rates on an uptrend, while stating that Thai banks could hike interest rates again after the central bank’s meeting in late May.
