Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Thematic (Sector/Industry)

<ul><li>The overall 4Q24E performance of the six banks under our coverage is not bad, with a combined net profit of Bt39.2bn, up 6.9% YoY due to a decline in provisioning.</li><li>However, the figure is expected to have fallen 10.3% QoQ, pressured by a reduction in NIM. Among the banks, KKP is expected to post the most notable YoY profit growth, driven by a significant drop in provisioning, while KBANK may have been the only bank likely to see provisioning decline both YoY and QoQ.</li><li>Looking ahead to 2025E, we prefer banks with a higher proportion of retail and SME loans. </li></ul>

The overall 4Q24E performance of the six banks under our coverage is not bad, with a combined net profit of Bt39.2bn, up 6.9% YoY due to a decline in provisioning.However, the figure is expected to have fallen 10.3% QoQ, pressured by a reduction in NIM. Among the banks, KKP is expected to post the most notable YoY profit growth, driven by a significant drop in provisioning, while KBANK may have been the only bank likely to see provisioning decline both YoY and QoQ.Looking ahead to 2025E, we prefer banks with a higher proportion of retail and SME loans. 

Banking: The Overall Profit Outlook for the Banking Sector in 4Q24E Is Not Bad

Cross Asset Strategy

<ul><li>KTX expects the Bank of Thailand (BoT) to lower interest rates only if inflation falls significantly below the target range and the economy contracts more sharply than anticipated.</li><li>Otherwise, the bank is likely to maintain its current policy rate of 2.25%, citing similar justifications as before.</li><li>KTX maintains our recommendation for banking and insurance stocks, including SCB, TTB, KBANK, and BLA, as they are expected to benefit from stable interest rates throughout the year.</li></ul>

KTX expects the Bank of Thailand (BoT) to lower interest rates only if inflation falls significantly below the target range and the economy contracts more sharply than anticipated.Otherwise, the bank is likely to maintain its current policy rate of 2.25%, citing similar justifications as before.KTX maintains our recommendation for banking and insurance stocks, including SCB, TTB, KBANK, and BLA, as they are expected to benefit from stable interest rates throughout the year.

Economic Update: Inflation in December 2024

<ul><li>The SET Index is expected to weaken, with the support at 1,370/1,350 points and the resistance at 1,420/1,440 points.</li><li>Key highlights influencing the market include: i) the first 100-day policies after Trump's inauguration as US president on January 20, 2025, such as raising import tariffs on countries with trade surpluses with the US, expelling migrant workers, cutting corporate tax rates, ending the Russia-Ukraine war, and withdrawing from the Paris Agreement (clean energy);</li><li>ii) selling pressure from LTF maturity</li></ul>

The SET Index is expected to weaken, with the support at 1,370/1,350 points and the resistance at 1,420/1,440 points.Key highlights influencing the market include: i) the first 100-day policies after Trump's inauguration as US president on January 20, 2025, such as raising import tariffs on countries with trade surpluses with the US, expelling migrant workers, cutting corporate tax rates, ending the Russia-Ukraine war, and withdrawing from the Paris Agreement (clean energy);ii) selling pressure from LTF maturity

<ul><li>The latest MPC meeting signaled that there is no urgency to cut the policy interest rate, despite pressures from the government or the downward revision of the inflation forecasts for 2024-25E to +0.4% and +1.1% (vs. the previous forecasts of +0.7% and +1.2%), which are only slightly above the lower bound of the MPC's inflation target range of 1-3%.</li><li>We anticipate that a rate cut would only occur if external risks escalate, such as a potential tax hike policy under a Trump 2.0 administration.</li><li>We maintain our recommendation for stocks that benefit from stable interest rates, including the banking and insurance sectors, with the top picks being SCB, TTB, TISCO, and TLI.</li></ul>

The latest MPC meeting signaled that there is no urgency to cut the policy interest rate, despite pressures from the government or the downward revision of the inflation forecasts for 2024-25E to +0.4% and +1.1% (vs. the previous forecasts of +0.7% and +1.2%), which are only slightly above the lower bound of the MPC's inflation target range of 1-3%.We anticipate that a rate cut would only occur if external risks escalate, such as a potential tax hike policy under a Trump 2.0 administration.We maintain our recommendation for stocks that benefit from stable interest rates, including the banking and insurance sectors, with the top picks being SCB, TTB, TISCO, and TLI.

Economic Update: Policy Interest Rate Maintained at 2.25% - DECEMBER 19, 2024

<ul><li>The latest debt relief measure, literally translated as 'You Fight, We Help,' is expected to benefit all parties involved.</li><li>Vulnerable debtors will have the opportunity to reduce installment payments and ease interest burdens, while banks will see improvements in asset quality.</li><li>Ultimately, this measure aims to help alleviate the overall household debt burden. We estimate that small and medium-sized banks are likely to benefit more significantly, although the extent will depend on the number of debtors registering for the program. </li></ul>

The latest debt relief measure, literally translated as 'You Fight, We Help,' is expected to benefit all parties involved.Vulnerable debtors will have the opportunity to reduce installment payments and ease interest burdens, while banks will see improvements in asset quality.Ultimately, this measure aims to help alleviate the overall household debt burden. We estimate that small and medium-sized banks are likely to benefit more significantly, although the extent will depend on the number of debtors registering for the program. 

Banking DECEMBER 13, 2024 - Small and Medium-Sized Banks to Benefit from New Debt Relief Measure

Thailand

TMBThanachart Bank Public Company Limited provides a full range of banking and financial services. The Bank offers corporate and personal lending, retail and wholesale banking, international trade financing, and investment banking services to its customers throughout Thailand.  It also has branches in Hong Kong, Laos, and Cayman Island.

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TMBThanachart Bank (TTB TB)

Banking: The Overall Profit Outlook for the Banking Sector in 4Q24E Is Not Bad

The overall 4Q24E performance of the six banks under our coverage is not bad, with a combined net profit of Bt39.2bn, up 6.9% YoY due to a decline...

Krungthai XSpring

Economic Update: Inflation in December 2024

KTX expects the Bank of Thailand (BoT) to lower interest rates only if inflation falls significantly below the target range and the economy...

Krungthai XSpring

Monthly Report: January 2025

Clouded by concerns over the first 100-day measures following Trump's inauguration as US president. The SET Index is expected to weaken...

Krungthai XSpring

Economic Update: Policy Interest Rate Maintained at 2.25% - DECEMBER 19, 2024

We maintain our recommendation for stocks that benefit from stable interest rates, including the banking and insurance sectors, with the top picks...

Krungthai XSpring

Banking DECEMBER 13, 2024 - Small and Medium-Sized Banks to Benefit from New Debt Relief Measure

Vulnerable debtors will have the opportunity to reduce installment payments and ease interest burdens, while banks will see improvements in asset...

Krungthai XSpring

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