Thailand banks pop the champagne on strong housing loans

Thanks to condo transfer and landed property.

It has been noted that Thailand's housing loans are more active in October.

According to a research note from Nomura, for other segments in the retail sector, residential mortgage is the only segment that has seen steady demand for loans for all the banks.

The report said condo transfers and new landed property launched this year have helped.

Meanwhile, it was also noted that credit cards started to see increasing trend in spending and expanding outstanding loans, although this is more of a seasonal pattern.

Nomura has said it does not expect recovery to be extraordinary. High household debt remains an issue.

Here's more from Nomura:

The auto sector remains depressed by weak demand. Loan demand could pick up in December, driven by the year-end motor show event, but this is unlikely to turn loan growth positive for most auto lenders, especially TISCO and TCAP, the YTD loans of which still contracted by -7.0% and -3.3%, respectively.

The outlook for auto industry should improve in 2015, but loan demand may not be exciting.

The high household debt and low farm income could still depress demand for passenger cars and pickup trucks in the upcountry.

SCB, KBANK remain our top picks. Focus is on 2015. Credit growth and economic activities should start picking up.

Corporate and SME loans are likely to lead the growth once private investment starts gaining momentum.

Residential mortgage should continue to lead growth in the retail sector with more condo transfers (from the strong sales in 2012-2013).

Siam Commercial Bank (SCB TB, Buy) and KBANK should be able to take benefit of their diversified footprint in both retail and corporate/SME sectors.