Thai banks to fall short of loan growth targets in 2024: analyst

Banks have a cautious stance as their lending policy for Q4.

The loan growth of Thai banks are expected to fall short of their 2024 targets on the back of a loan contraction in 2024 and a more cautious strategy in Q4.

Several banks have guided to remain cautious in their lending policy in Q4, said UOB Kay Hian analyst Thanawat Thangchadakorn.

Additionally, they might continue the stringent lending policy towards 2025 due to the uneven economic recovery outlook, he said.

Overall, Thai banks under UOBKH’s coverage reported a combined net profit of THB54.7b in Q3, 9% year-on-year (YoY) higher, and above forecasts.

Credit costs improved, in line with expectations, and is expected to continue improvement through Q4 2024 and 2025.

Amongst banks, Kasikornbank (KBANK) was noted for its commitment to normalise credit costs in 2025. In contrast, TISCO Financial Group did not improve its credit costs, UOBKH said.

Looking ahead, banks are bracing for more rate cuts, particularly in Q1 2025.

Amongst banks, SCB X disclosed that a 1% rate cut will result in its net interest margin (NIM) declining by 25-30 basis points.

“We expect the big banks to be impacted by the rate cut, especially Bangkok Bank (BBL). However, we expect the small banks (TTB, TISCO, KKP) will benefit from the rate cut,” Thangchadakorn said.