By The Nation
Nunmanus Piamthipmanus, chief investment officer at SCBAM, said that investors must consider bad debt reserve, capital funding, and customer base whether it can take risks or not.
"Banks with a strong financial base can generate profits and pay dividends in the long term because they can cope with the impact from crises and asset quality deterioration," she said.
She said that bank stocks are still under pressure from various negative factors, such as a decline in profitability, change in business structure, and asset quality deterioration, leading to increase in bad debts.
"These negative factors would cause an impact on bank stocks in the long term because debtors both household and business sectors still suffered from the decline in income due to restrictions in economic activities," she said.
"Meanwhile, fund managers had reduced investment in bank stocks before the Covid-19 outbreak."
She added that the Bank of Thailand's move ordering banks to hold off paying interim dividend and buying back shares would enable banks to cope with the crisis although investors expecting dividends were disappointed.
"When the economy recovers, banks would be able to grant more loans," she added.
Separately, she said that investment in funds that focus on dividend stocks is still a good choice when the stock market is still facing volatility, but dividends may drop lower than in previous years.
"The Covid-19 outbreak caused an impact on every business sector, which can be seen from the decline in gross domestic product and listed companies' profit forecasts," she said.
"Meanwhile, many experts expected the Stock Exchange of Thailand's earnings per share this year to drop over 20 per cent year on year."
She advised investors to opt for SCB Dividend Stock Open-End Fund (SCBDV) as the returns since establishment was 8.96 per cent.
"Recently, this fund was awarded the best equity fund 2020 in the category of equity large-cap by Morningstar Research [Thailand]," she added.