Brokers believe that banking groups fully benefit after the Monetary Policy Committee raises interest rates. Willing to give greater investment weight than the market, they cheer for BBL – KTB as a top pick, especially BBL with stronger asset quality than the group. While the group was sleeping in the bank, he pointed out that the effect was minimal because the price had dropped a lot. It reflects the news that the dollar has been on the rise for a long time. Shout out to Tedlor Sawad.
On September 27, the Monetary Policy Committee (MPC), Bank of Thailand decided to raise the interest rate by another 0.25% to 2.50%, the highest interest rate in 10 years, indicating that the interest rate increase so far is at an appropriate level for stable long-term economic expansion. .
ASPS commends BBL for its strongest asset quality of the group.
Asia Plus Securities analysis indicates that the Monetary Policy Committee unanimously decided to raise the interest rate by another 0.25% to 2.5%, making the Thai interest rate enter the appropriate point with stable economic expansion in the long term according to the view of the Monetary Policy Committee, This picture is immediately positive for interbank loans, and good for BBL and KTB.
At the same time, the loan interest side still needs to monitor the group’s response. After the previous round of interest rate increases, no commercial banks raised their M-RATE. In the event of an increase in M-RATE, it is considered that the MLR is charged to large clients and is likely to be raised at a higher rate than the loan interest rate charged to SMEs and small businesses, whose debt repayment capacity is still gradually recovering, which is generally positive for a bank. Central Lebanon, which has the highest proportion of large loans in the group.
By investing in the banking group, BBL is selected because of its stronger asset quality than the group and is expected to benefit from interest rate increases more than the group. Small banks are at a disadvantage to large banks when interest rates rise. But it has the advantage of a high dividend rate. I still like TISCO, which offers the highest ratio in the group, more than KKP.
In addition to the strategic perspective in light of the return of net purchases by foreign investors yesterday combined with an increase in policy interest rates, this should create excitement for KBANK, whose price has undergone a correction to become the top of the group of major commercial banks, by about 15.6% since the beginning of the year ( SET index – 10.3% since the beginning of the year).
Point to the financial group’s stock price correction and the news has already been reversed.
As for the impact on non-banking (non-banking) groups (only MTC, SAWAD, TIDLOR) in case banks increase their M-Rate and bond yields remain at a high level. Essentially, this increases the group’s cost of funds (COF) trend in the coming period. The average one-year interest-bearing debt structure at the end of the second quarter of 2023 was 38% of interest-bearing debt. (Debts with financial institutions amount to about 21% of debts with interest)
In the last period since the beginning of Thailand’s high interest rate cycle in the second half of 2022, the group’s COF for the period Q2/66 was found to be around 3.3% versus 3.0% for the period Q2/65, in exchange for the interest rate on loans remaining constant (in the event of an increase in interest rates). interest, this will only affect the new contract). In terms of asset quality the group is clearly still in the upward cycle of non-performing loans.
However, the registered Pawn Group share price has risen since the Thai bond yield rose during September 2023, causing the group’s share price to rise. There has been a moderate correction and since the beginning of the year it has given negative returns for all of them. It should reflect some of the above factors.
Give an outperformance recommendation for TIDLOR (FV 2023 @B26) because the stock price is down 20.3% YTD, more than MTC and SAWAD minus 3.3% and 10.8% YTD respectively, coupled with TIDLOR’s asset quality in terms of coverage ratio. , which is the highest in the group by 266.%, while the MTC share price (neutral) declined in the past. It makes the price similar to FV in 2024 at 40 baht (FV in 2022 @B35) and has a more open upside.
Dow maintains overweight in banking sector, recommends BBL-KTB.
Dao Securities (Thailand) Public Limited revealed that it has a positive view on the commercial banking stock. In the MPC’s interest rate increase on September 27, the MPC is then expected to maintain interest rates at this level until 2024, which will have a positive impact on large banks. In order from highest to lowest are BBL, KTB, KBANK and SCB.
Keeping the banking group’s weight as “Over Market” it selects BBL (Buy/Target 195.00 Baht), KTB (Buy/Target 24.00 Baht) as the top pick.
However, we are a bit negative on the financing group because this round of interest rate hikes is expected to be the end. As a result, the Financial Group’s performance remained as expected, with no significant additional declines.
In this regard, the Financial Group still maintains its investment weight. “More than market” expectations that operating results bottomed out in Q3/66 from rising NPL credit costs before starting to improve in Q4/66, with the top pick being Darkening (buy/target 62.00 baht)
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