Small Thai banks to outperform big banks as NPLs improve

Loan growth should accelerate in the second half of 2017.

Maybank Kim Eng analysts expect small banks (Thanachart Capital/TISCO Bank/Kiatnakin Bank) to outperform big banks, mainly due to lower credit cost and as NPLs among the small banks should have continued to improve.

"However, small banks’ loan growth likely remained sluggish in 2Q17 as new auto loans might not have been strong enough to compensate for the large loan repayments from the first-car scheme. However, this should be over in 2H17 and loan growth should accelerate then. On the other hand, Krung Thai Bank is likely to be the worst performer in this earnings season, mainly because of its THB12b EARTH loans that may have driven provisioning expenses up 28% QoQ in 2Q17. We look for a 17% QoQ decline in KTB’s earnings," added Maybank Kim Eng.