Corporate loan repayment blamed for Thai banks' profit potholes

Will this improve in the next months?.

It has been noted that Thailand banks, with the exception of KTB, reported 0.1% m-m loan growth in October.

According to a research note from Nomura, the growth was led by Kasikornbank, followed by Kiatnakin Phatra and TMB Bank.

Meanwhile, TISCO Financial Group showed the greatest contraction at -1.1%.

Overall, YTD credit growth remains lacklustre at 0.8%.

TMB led the growth (+5.9%), followed by KBANK (+5.2%). TISCO and Thanachart Capital are still affected by the slowdown in the auto sector, with growth reported at -7.0% and -3.3%, respectively.

Here's more from Nomura:

Corporate/SME-led growth. Corporate and SME lending showed positive trends for most of the banks that reported positive loan growth in October.

Corporate loan repayment was mainly the culprit for those with negative loan growth. We expect loan demand in the corporate and SME sectors to improve more visibly in Nov-Dec due to seasonality.

But most banks are likely to miss their loan growth targets this year, except for Krungthai Bank (KTB TB, Buy), KBANK and TMB, which could be close to or beat target.

Auto lenders still face weak demand The auto sector remains depressed by weak demand. Loan demand could pick up in December, driven by the year-end motor show event, but this is unlikely to turn loan growth positive for most auto lenders, especially TISCO and TCAP, the YTD loans of which still contracted by -7.0% and -3.3%, respectively.

The outlook for auto industry should improve in 2015, but loan demand may not be exciting. The high household debt and low farm income could still depress demand for passenger cars and pickup trucks in the upcountry.