Large corporate and SME loans in Thailand to rebound

Due to pent-up loand demand, partly.

In the Thailand banking sector, large corporate and SME loans are expected to rebound, a positive outlook on business loan demand recovery.

According to a research note from Maybank Kim Eng, these loans should rebound due to the pent up loan demand and the backlog of new investment projects awaiting Board of Investment approval.

An improvement is also seen in the CAPEX to sales ratio of the listed companies, especially after the Coup in May.

Here's more from Maybank Kim Eng:

Note that we forecast industry loan growth of 5.5% and 8.4% in 2014 and 2015, 1x of nominal GDP growth.

We expect NIM to drop in 2H14 due to higher funding costs from renewed deposit competition.

Then, we believe the sector NIM to improve after banks start to increase their interest rates next year.

The higher interest rate would benefit the large banks as most lending is floating rate while the auto lenders could post a lower NIM given the HP loan are fixed rate.

Prefer large banks to small banks. This was mainly due to:

(i) Better asset quality;

(ii) More bullish on NIM outlook;

(iii) Strong network coverage to gain deposits; and

(iv) Diversified loan portfolio and revenue structure.