Banking sector
Play
Anticipating loan growth in final bend of 2014 Neutral
Banking sector
- Loan growth remains sluggish in October
Nine commercial banks under our coverage (except KTB) reported the
Summary Statement of Assets and Liabilities as of October 2014 with
outstanding net loan (after allowance for doubtful accounts) of B7.33tr or
the growth of 0.13%mom and 4.03%yoy. Overall, 10M14 net loan increased
only 0.91% from end-2013, very low when compared with FY2014 net loan
growth forecast of 5.92%yoy. Loan growth was sluggish in October; retail
loans, especially car leasing, declined from the prior month, consistent with
overall car sales in 9M14 that contracted 37.3%yoy. Home loans and
personal loans still showed good growth. Corporate loans stayed flat in this
quarter; growth was seen in some banks, but repayment was high as well.
SME loans showed only slight growth, mainly from the medium sized, while
the small sized remained quite flat. The banks with strongest net loan
growth in October were KBANK (all segments of loans), TMB, and KKP
(corporate), while the banks that focus on leasing business, which are
TISCO, TCAP, and SCB, slowed lower net loan this month. Outstanding
deposit in October (including borrowings for small banks) was B8.07tr,
increasing 0.17%mom and 3.23%yoy, led by BBL (from a special underone-
year fixed deposit), TCAP (CASA), and BAY (from a special eight-month
fixed deposit). Overall, 10M14 deposit improved only 0.17% from end-
2013.
- Final bend of 2014, growth anticipated from big banks
We still have a positive outlook toward the banking business in the
remainder of the year, believing that the growth would be able to meet
FY2014 target as a result of a high season. SME and retail loans are
projected to show accelerated growth, while corporate loans, mainly longterm
project loans, would grow. The approaching capex cycle in 2015 owing
to the country’s economic stimulus plans and the eight-year infrastructure
investments with the budget of B2.4tr would be a major factor to boost a
demand for loans, especially corporate and SME.
- Top picks: KBANK, KTB, TMB
We maintain NEUTRAL for the sector. Top picks are KBANK (highest ROE
among peers, with an upside after K-transformation project is complete),
KTB, and TMB (ROE of these two stocks can increase in the next two years).
