Kasikornbank's loan growth momentum finally nails an improvement

SME loans have finally progressed.

Loan growth momentum for Thailand-based Kasikornbank has started to improve from SME loans, and NIM should stay at a high level due to the high LDR at 95-96% and CASA ratio at 68%.

According to a research note from Maybank Kim Eng, non-interest income should grow 8% YoY due to strong fee income growth in the retail segment eg transactional banking, bancassurance and credit card.

Cost-to-income ratio (CIR) is expected to be flat QoQ at 44%. CIR normally peaks in 4Q due to the additional expenses from K-transformation project.

NPL ratio is also expected to stay flat QoQ at 2.3% with 84bps provision to loan in 3Q14 against the company’s full-year target of 85-90bps.

In sum, earnings are expected to grow 10% YoY to THB11.7b in 3Q14F.

Here's more from Maybank Kim Eng

Expect loan demand to peak in 4Q14. Management expects 5% YTD loan growth in 9M14.

Note that 8M14 lending grew 3.4% YTD and 5% YoY, driven by 6.5% YTD growth from SME loans, followed by 2.5% for corporate and 2.2% for retail segment.

We expect strong loan growth from SMEs in 4Q14 due to the high season for working capital loan demand.