Krung Thai Bank's loan growth predicted to rocket in 2H14

Thanks to improving economy and political environment.

Thailand-based Krung Thai Bank expects loan growth to remain strong given the improving economy and better political environment, with 1H14 loan growth was supported by government (+13% YTD) and consumer loans (+9%).

According to a research note from Maybank Kim Eng, the bank plans to gain more deposits amid the expected strong loan demand in 2H.

Management targets 2.7-2.8% NIM and 92% LDR this year, while Maybank Kim Eng noted that 2Q14 NIM and LDR were 2.9% and 97%.

The report noted that it believes KTB can achieve a strong loan growth but we’re cautious about its target of 10-12% fee income growth given the weak net fee income in 1H14 (+2% YoY).

Here's more from Maybank Kim Eng:

We raise loan growth by 2ppts to 9% and cut fee income growth by 2ppts to 8% this year.

We expect better trading income and FX gains and strong bancassurance fees in 2H14.

NIM should gradually decline as the bank will raise the deposit and lower LDR in 2H14.

Maintain BUY. We raise its 2014 earnings by 2% and expect flat earnings this year.

Excluding the extra items (THB1.7b dividend income, THB3b gain from Vayupak Fund and THB900m loss from investment in Islamic Bank in 2013), core earnings should grow 10% YoY in 2014.