Thailand Banking Sector: Comprehensive Analysis of Key Players
Broker: UOB Kay Hian
Date: January 24, 2025
Sector Overview
The banking sector in Thailand delivered a robust performance in 4Q24, with combined net profits of Bt51.3 billion, representing a 20% year-on-year (yoy) increase, albeit a 6% quarter-on-quarter (qoq) decline. This performance exceeded market expectations by 9%. Improved non-interest income and pre-provision operating profit (PPOP) were notable highlights, while net interest margins (NIM) slightly contracted to 3.73% from 3.76% in 3Q24. Banks are optimistic about loan growth in 2025, focusing on asset quality and credit cost improvements. UOB Kay Hian maintains an OVERWEIGHT stance on the sector, with top picks being Kasikorn Bank (KBANK), Krungthai Bank (KTB), and SCB X (SCB).
Bangkok Bank (BBL)
BBL reported a 4Q24 net profit of Bt10.4 billion, marking a 17% yoy increase but a 17% qoq decline. Pre-provision operating profit grew 13% yoy but dropped 12% qoq. For 2024, BBL achieved a net profit of Bt45.2 billion, reflecting 8.6% yoy growth. The bank witnessed a significant decline in its non-performing loan (NPL) ratio qoq, driven by successful debt restructuring efforts. However, there are concerns about potential increases in credit costs and NPL ratios in the future despite economic recovery. BBL’s total loans grew by 1.2% yoy, although this fell short of its 2024 target of 3-5%. Its NIM slightly improved by 4 basis points (bp) qoq but was down 10bp yoy to 3.09%. Credit costs increased by 5bp yoy to 114bp. BBL’s asset quality trajectory remains commendable, with an NPL ratio of 2.7% in 4Q24, down from 3.4% in 3Q24.
Kasikorn Bank (KBANK)
KBANK’s 4Q24 earnings stood at Bt10.5 billion, a 12% yoy increase but a 12% qoq decline. The results were in line with expectations but surpassed market consensus by 9%. For 2024, KBANK achieved a net profit of Bt48.6 billion, reflecting a strong 14.6% yoy growth. Non-interest income played a pivotal role in boosting performance. However, an increase in credit costs qoq to 197bp raised concerns. The bank’s NIM contracted by 9bp qoq and 31bp yoy to 3.52%. Loan growth was marginal at 0.7% yoy, falling short of its 2024 target of 3-5%. Asset quality remained stable, with an NPL ratio of 3.2%. KBANK aims to maintain normalized credit costs in 2025 and focus on preserving good asset quality. The bank has set a credit cost target of 140-160bp for 2025.
Kiatnakin Phatra Bank (KKP)
KKP delivered a surprising 4Q24 net profit of Bt1.4 billion, up 110% yoy and 8% qoq. The results exceeded both company and market expectations by 39% and 37%, respectively. The notable improvement was driven by net gains on financial instruments measured at fair value. However, provision expenses surged 34% qoq. KKP’s PPOP rose 14% yoy and 18% qoq. For 2024, net profit declined 8.4% yoy to Bt4.99 billion, primarily due to loan contraction of 7.8%. Its NIM contracted by 7bp qoq and 31bp yoy to 4.08%. Credit costs increased by 19bp qoq but decreased by 94bp yoy to 218bp. The bank’s NPL ratio climbed to 4.2%, up 10bp qoq and 100bp yoy. KKP has guided for flat or slightly negative loan growth in 2025, citing risks in the automobile industry due to price wars from Chinese carmakers.
Krungthai Bank (KTB)
KTB’s 4Q24 net profit came in at Bt10.5 billion, a remarkable 71% yoy increase but a 6% qoq decline. The results were in line with expectations. For 2024, KTB achieved a net profit of Bt43.9 billion, up 19.8% yoy. PPOP declined 4% yoy and 10% qoq. The bank significantly reduced its credit costs qoq, signaling an improvement in asset quality. KTB’s total loans grew by 4.8% yoy, meeting its 2024 target of 3%. Its NIM contracted by 6bp qoq and 12bp yoy to 3.33%. The NPL ratio improved to 3.0% in 4Q24, down from 3.1% in 3Q24. KTB’s focus on asset quality and credit cost improvements positions it well for 2025.
SCB X (SCB)
SCB posted a 4Q24 net profit of Bt11.7 billion, up 7% yoy and qoq. The results outperformed expectations, exceeding company and market forecasts by 12% and 18%, respectively. For 2024, SCB achieved a net profit of Bt43.9 billion, reflecting a modest 1% yoy growth. PPOP rose 9% yoy and 2% qoq. Lower-than-expected provision expenses were a key positive surprise, contributing to improved asset quality qoq. SCB’s total loans contracted by 0.9% yoy, missing its 2024 target of 3-5%. Its NIM declined by 3bp qoq and 8bp yoy to 3.88%. Credit costs dropped by 18bp qoq but rose by 9bp yoy to 160bp. The bank’s NPL ratio stood at 3.4%, showing a slight improvement. SCB remains committed to enhancing asset quality in 2025, with a loan growth target of 1-3% and a credit cost target of 150-170bp.
TISCO Financial Group (TISCO)
TISCO reported a 4Q24 net profit of Bt1.706 billion, down 4% yoy but flat qoq. The results were in line with expectations. For 2024, net profit declined 5.5% yoy to Bt6.9 billion. PPOP decreased 2% yoy and qoq. TISCO’s NIM slightly improved by 2bp qoq but contracted by 19bp yoy to 4.96%. Credit costs rose by 9bp yoy to 57bp. The bank’s NPL ratio increased to 2.4%, up 13bp yoy but remained flat qoq. Management has guided for a credit cost range of 100-120bp in 2025, higher than the previous guidance of 100bp. TISCO expects funding costs to peak and NIM to widen in 2025.
TMBThanachart Bank (TTB)
TTB’s 4Q24 net profit was Bt5.1 billion, up 2% yoy but down 2% qoq. The results were in line with expectations. For 2024, net profit rose 12.9% yoy to Bt21.03 billion. PPOP declined 6% yoy and 3% qoq. Loan contraction of 6.6% yoy was attributed to a selective focus on growing a quality portfolio. TTB’s NIM declined by 1bp qoq and 14bp yoy to 3.27%. Credit costs remained stable qoq but dropped by 126bp yoy to 149bp. The bank’s NPL ratio improved to 2.6%, down 14bp qoq and 3bp yoy. TTB aims to achieve a medium-term ROE milestone of 10% and has set a loan growth target of 0-2% for 2025.
