Bank shares witness a boost on hopes BOT will allow dividend payments
The bank index rose sharply yesterday (August 18) on hopes that the Bank of Thailand (BOT) will allow banks to pay dividends if October stress test shows their capital is above the minimum requirement of 12 per cent.
The Stock Exchange of Thailand (SET) Index closed at 1,330.11 yesterday, up 9.20 points, or 0.70 per cent, while the bank index rose by 4.09 points, or 1.49 per cent, to 279.43.
Tisco Financial Group’s share price rose by Bt1.75, or 2.62 per cent, to Bt68.50 per share, with transactions totalling Bt766.19 million.
Bangkok Bank’s price increased by Bt2, or 1.90 per cent, to Bt107.00 per share, with transactions amounting to Bt541.19 million.
Kasikorn Bank rose by Bt1.50, or 1.71 per cent, to Bt89.25 per share, with transactions totalling Bt1.71 billion.
Siam Commercial Bank increased by Bt1, or 1.38 per cent, to Bt73.25 per share, with transactions amounting to Bt771.51 million.
Krungthai Bank (KTB) rose by Bt0.10, or 1.02 per cent, to Bt9.90 per share. Transactions totalled Bt208.64 million.
TMB Bank was up by Bt0.01, or 1.03 per cent, to Bt0.98 per share, with transactions amounting to Bt190.75 million.
Kiatnakin Bank (KKP) rose by Bt0.75, or 1.89 per cent, to Bt40.50 per share. Transactions totalled Bt122.16 million.
According to a KTB Securities (KTBST) analysis, banks will pay dividends this year at the lowest payout ratio as their capital was currently 17-22 per cent.
“Comparing banks’ dividend yield based on the lowest dividend payout ratio, small banks have a dividend yield that is more than large banks,” the analysis said. “KKP and Tisco have a dividend yield at 6 per cent and 5 per cent, respectively, while KTB is the only large bank that has the highest dividend yield at 5 per cent.”
KTBST weighted investment in bank shares as same as the market, advising investors to buy BBL at a target price of Bt120 per share as this bank has the lowest risks from setting up allowances for doubtful debts and the highest coverage ratio at 171 per cent to deal with risks in the future.
According to a Capital Nomura Securities’ analysis, the average commercial bank’s capital in June was 19.2 per cent, higher than BOT’s minimum requirement of 12 per cent despite the Covid-19 fallout.
“Considering each bank’s capital at the end of the first quarter this year, KKP and SCB have the lowest at 17.2 per cent, while Tisco has the highest at 20.7 per cent,” the analysis said.
“Banks’ capital is currently strong, especially large banks that are able to handle losses from Bt72 billion to Bt130 billion, so they will be able to pay dividend,” it added.
However, the securities company still weighted investment in bank shares as same as the market, advising investors to buy BBL and Tisco at a target price of Bt120 and Bt80 per share, respectively.
