Banking Sector:Bank loans hit year’s high in Apr

Apr loans up 0.45% m‐m: The combined loans of 10 listed banks under our
coveragegrew 0.45% m‐m, the highest for the year, in Apr 2017, bringing
YTD loan growthback into positive territory at 0.35% from end‐FY16 after
a sharp contraction in Jan.

    Much of the loan growth continued to come from corporate loans.

关于我们,    BAY the biggest winner, TISCO the biggest loser in terms of Apr loan
growth: InApr, six out of 10 listed banks under our coverage recorded
m‐m loan growth. BAYturned out to be the sector’s best performer in
terms of m‐m loan growth in Apr, upas high as 1.43%, bringing its YTD
loan growth back into positive territory at 0.04%while LHBANK retained
its top position in terms of YTD loan growth at 3%. On thedownside,
TISCO was the biggest loser in terms of m‐m loan growth as its
loansshrank 0.98% m‐m, which also made it the worst performer in YTD
terms with acontraction of 2.9% from end‐FY16.

    Scant impact from loan rate cut: Several big banks of late cut
lending rates in movesthey said would help the country’s flagging
economy. In our view, loan rate cut isunlikely to take a big bite out of
interest income and would do little help to boostloan demand but it
would rather help ease loan repayment burden of borrowers.

    ‘NEUTRAL’ position in banking space: We stick to our view that loans
will accelerateover the remaining course of the year but risk also
remains that NPLs will keep risingin 2QFY17. We also hold a ‘NEUTRAL’
position in the banking space. TISCO remainsour top pick with a
Bt83/share target price. Even though TISCO continued to grapplewith loan
contraction, declining cost of funds however helped keep its net
interestincome growing and NPLs had also been on a steady decline.

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