Thai banks' Feb loan growth numbers still unimpressive for analysts

Only Kasikornbank made the cut.

It has been noted that Thai banks’ February loan growth data (excluding KTB) overall has not shown strong loan demand yet, with aggregate m-m credit growth of 0.5%.

According to a research note from Nomura, only KBANK that has shown a positive trend since January, driven by working capital drawdowns by corporates and SMEs, but this is more of a typical pattern for the bank.

Nomura noted that the bank's Jan/Feb 2014 showed m-m loan growth of 1%/0.5%, and so it still has to see if this is sustainable.

Apart from this, BAY, BBL, TCAP and TMB also saw some loan demand from corporates, mainly
working capital, while the rest are still seeing flat or negative growth in corporate lending m-m.

Here's more from Nomura:

Auto still contracted, albeit less - Auto lending is still in its recovery phase and likely to see positive net new lending in 2016.

TCAP is seeing greatest improvement among auto lenders in February, with flat loan growth (-0.3% m-m). Auto hire purchase loans remain slow (-1% m-m), while corporate lending helped support growth (+1% m-m).

TISCO is still most impacted by the weak auto lending (-2.5% YTD), but this is in line with what we expected, and situation should gradually improve as the bank expects corporate lending to help support growth this year.

Still expect growth to accelerate in 2H15F but downside likely ahead - We estimate overall loan growth for eight Thai banks to reach 6% this year, based on their current guidance.

We expect credit demand from SMEs and corporates to gather momentum towards 2H15 once government spending picks up the pace and more infrastructure projects get approved as this should support the sentiment.

Downside risk, however, exists, if the economy fails to take off as expected towards 2H15. With Kasikorn Research, an economic research arm of KBANK, revising down its basecase GDP forecast to 2.8% from 4.0% yesterday, this signals a relatively strong downside risk ahead, in our view.

And this could mean there is further room for disappointment as our economic team indicated after the Bank of Thailand’s recent GDP growth revision to 3.8% from 4.0%.