High hopes set for Thai banks' loan demand rebound in 4Q14

But disappointment might also come.

Thailand's loan demand is expected to improve in the remainder of this year, driven by corporate and SME loans.

According to a research note from Maybank Kim Eng, however, it sees risk of not meeting its forecast.

This is as loan growth remained lackluster at 4.3% YoY and 1.6% YTD in 10M14.

Here's more from Maybank Kim Eng:

SME loans led the growth. The nine banks under our coverage posted loan growth in Oct 2014. Overall loan demand remained weak.

TMB and KBANK reported strongest loan growth YTD, thanks to healthy demand for SME loans.

TISCO and TCAP posted negative loan growth YTD on contraction of auto loans as monthly new auto lending was lower than auto repayment.

KKP’s loan growth remained positive as business loans helped offset negative auto loan growth.

Stable LDR at 97% in Oct 2014. Sector deposit was stable MoM. KKP and TISCO experienced the highest deposit outflow YTD to Oct 2014.

We believe both banks need to lower their deposit base to sustain net interest margin as auto loan demand remained weak.

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