Thai banks set to feel pain from waived digital fees in Q2

There is an estimated 1% impact to FY18 earnings.

Thai banks are set to feel the brunt of their decision to waive digital transaction fees with Maybank Kim Eng estimating a 1% impact to Q2 earnings which are due in mid-July. 

Thailand’s four largest banks, Bangkok Bank, Kasikorn Bank, Siam Commercial Bank (SCB), and Krungthai Bank, opted to waive digital transaction fees in an effort to lure customers turning to digital money transfer methods including government-backed PromptPay and Omise.

KBANK may emerge the worse out of its peers as its earnings may be hit by 2.5% due to its higher exposure to the digital segment, according to analyst Tanawat Ruenbanterng. 

“The impact on the sector could be greater if customers migrate from other channels such as ATMs, which still carry fees, to mobile and Internet platforms,” he added.

Although loan growth clocked in at at a healthy 4.7% in Q1, Ruenbanterng estimates that it could not boost net interest income especially when net interest margins, a key indicator of profitability, have weakened in recent months.

Also read: Thailand's digital shift to boost banks' revenue

However, Thai banks may have something to look forward to as an expected rate hike by the Bank of Thailand may boost their flailing NIMs which have been sluggish since their foray into corporate loans.