Brokerages lower loan growth forecast
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Revision after slower expansion in July
A number of brokerage firms have revised down their predicted lending growth in the banking sector this year, following slower loan expansion last month and the country’s continuing economic slowdown.
According to banks’ reports to the Stock Exchange of Thailand, total loan growth in July expanded only 0.3 per cent from the June level, resulting in lending growth over the first seven months rising by 5.6 per cent, year on year.
Finansia Syrus Securities has cut its forecast for the banking industry’s loan growth this year to 9 per cent from its previous projection of 11.75 per cent.
Lower credit growth will also affect the sector’s net interest income, which is expected to decline 3.3 per cent, while non-interest income is predicted to drop 2 per cent, said the brokerage.
The overall net profit of the banking sector this year is expected to drop by 5.6 per cent from the previously projected of Bt187 billion, meaning net earnings will rise by 16.6 per cent year on year, which would be the lowest growth since 2010, the company said.
Finansa suggested investors should tone down their investment in banks that are players in the hire-purchase market, due to concerns over household debt and the state of the auto market.
KGI Securities (Thailand) said in its research that as the country’s economic slowdown would likely affect lending growth and profits in the banking sector, it had lowered its lending-growth estimate for the industry to 8 per cent. KGI’s previous forecast was for an expansion rate of 11 per cent.
The securities house said a decline in gross-domestic-product growth of 1 percentage point would pull down overall lending growth by 2.4 percentage points.
KGI has also revised down its GDP growth forecast for the Kingdom this year to 3.2 per cent, from the previous estimate of 4.5 per cent.
Moreover, it believes there is a high chance the policy interest rate will be slashed to 2 per cent from 2.5 per cent in order to build economic momentum, as the economy has weakened and lacks positive support from public investment.
Krungsri Securities, however, has maintained its predicted loan growth of 11.4 per cent for the banking sector, reasoning that despite the month-on-month slowdown in lending growth, credit demand in the export and personal-loan sectors will accelerate in the second half of the year.
The securities firm noted that Kiatnakin Bank was the only bank to have showed outstanding-loan growth in June, at 1.2 per cent, while Bank of Ayudhya, Bangkok Bank and Land and Houses Bank all reported a drop in their outstanding lending.
Krungsri Securities said commercial, hire-purchase and personal lending were the key drivers of loan growth in the first seven months of the year, especially hire purchase, in which Tisco Financial Group had the highest growth at 13.3 per cent.
Kiatnakin Bank had the next highest year-on-year hire-purchase growth, at 9.3 per cent.
Krungthai Bank recorded the highest hire-purchase loan growth among the major banks, at 8.6 per cent.
