Thailand banking sector regains ground

Banks seem likely to meet the 23% net profit growth target as they recover from floodings of 4Q11.

Maybank Kim Eng Thailand reports that good 1Q12 earnings are to be expected from Thai banks, as they rebound from the weak flood that hit 4Q11. Many banks are likely to report new record quarterly profits.

Maybank states that if their 1Q12 estimates are met, the Thai banks would be well on track to meet the FY targets of 23% net profit growth, underpinned by 13% loans growth, 17% fee income growth while taking pressure on NIM.

Corporate tax rate cut to 23% is additional profit booster. Even as Maybank remains positive on the fundamental outlook of the Thai banks, the recent share price rally has already priced-in most of the positive developments, in their view. It recommends take profit on BAY, BBL, KBANK and SCB and switch to KTB & TCAP, which offers >15% upside.