The share price of Krung Thai Bank and TMBThanachart Bank rose on Friday following the unconfirmed reports that the two banks are looking to merge and become Thailand’s largest commercial bank by total assets.
Krung Thai Bank Public Company Limited (SET: KTB) rose as much as 2.1% during the morning session on Friday, while TMBThanachart Bank Public Company Limited (SET: TTB) jumped 5.2%. Both stocks pared some gains as the session progressed.
Based on the two banks’ financial report on 2024, the combined total assets would be THB5.36 trillion with the total income of THB303 billion and total net profit of THB65 billion.
It was reported that the rationale for the merger could be economies of scale as the largest bank, cost reduction and leading digital banking position.
CGS International (Thailand) Securities (CGSI) wrote that there could be tax benefit from the merger of the two banks if a government and the Ministry of Finance provide supports in term of tax exemption to the merging entities like when TMB Bank merged with Thanachart Bank in 2019.
The firm saw potential synergies from the merger in terms of loan portfolio balance since KTB does not have any exposure in auto loans, while TTB has the second largest market share in auto loan.
KTB could reap the benefit from TTB’s expertise in wealth management businesses including cross selling of mutual funds and bancassurance.
CGSI expected both banks could synergize in digital banking services since they already have expertise in mobile banking development with KTB’s large scale customers and TTB’s mass-segment customers.
Additionally, the merger could save costs in redundant assets and headcount.
In CGSI’s view, the firm believed that the merger is likely since the Ministry of Finance holds stakes in both banks.
