How much are banks affected after reducing MRR interest rates by 0.25% to help vulnerable groups?
Analysts' views on the Thai Bankers' Association Responding to the government policy, the announcement of interest rate reduction of 0.25% to help retail customers and vulnerable groups for 6 months, starting 1 May, is expected to have an impact on limited bank groups. I see banks already restructuring their debts and extending the maturity of their debts.
TISCO Securities
Evaluated from the announcement byThai Bankers Association (TBA) that commercial banks have agreed to reduce the retail interest rate they charge to prime customers (MRR) by 0.25% for 6 months, with Bangkok Bank (BBL) being the first commercial bank to reduce the MRR rate by 0.25% for BBL, a famous rate reduction Said to apply to all borrowers. Not only vulnerable groups
The overall impact is still limited in the case of BBL. In Q4/2566, BBL retail loans were worth 3.21 billion baht, accounting for 12% of the bank's total loans, with 10% of retail loans or 2.57 billion baht being Mortgage It can be expected that all MRR interest rates will be used, while SME loans using MRR rates are considered to be few.
Therefore, the impact from the MRR rate reduction is estimated at 321 million baht (2.57 billion baht x 0.25% x 1/2 year), equivalent to 0.2% of estimated gross interest income in 2567 and 0.6% of net profit after deductions. Tax estimates for 2567 add more pressure to competitors.
TISCO Securities maintains its "Buy" recommendation for TTB with a fair value of 2.50 baht and KKP with a fair value of 60.00 baht.
Asia Plus Securities
Estimate that for Thai commercial banks The top three with the highest proportion of loans based on MRR are as follows:
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- Krung Thai Bank ( KTB ) There are SMEs and houses together making up approximately 30% of the loan portfolio. Including personal loan portfolios (Excluding credit cards and personal loans of KTC, approximately 3.3 billion baht), most of which are government customers, relying on MRR for approximately 22% of the loan portfolio.
- Siam Commercial Bank (SCB) There is a combined proportion of home loans and SME loans of approximately 48% of the loan portfolio.
- Kasikorn Bank (KBANK) There is a combined proportion of home loans and SME loans of approximately 46% of the loan portfolio.
If considering that the group is fragile This is a group of debtors who have undergone long-term debt restructuring, including large companies, SMEs, and small businesses according to the BoT's measures (ending at the end of 2566). The relative proportion of the loan portfolio will be less than the above figure, for example, SCB is approximately 11% of Loan portfolio, KBANK approximately 8% of the loan portfolio.
Therefore, according to the opinion of the research department The impact on profit estimates is not high, as reflected from SENSITIVITY ANALYSIS in the WORST CASE case, based on the assumption of reducing MRR for the entire system and realizing it for the full year. It will affect the group's profits by approximately 3.6%.
While the MRR reduction period as above is 6 months and only for vulnerable groups according to the perspective of each bank. As a result, the evaluation of the impact on the estimate is somewhat less than SENSITIVITY ANALYSIS.
In this regard, the group's net profit The first quarter of 67 accounts for 27% of the full year's profit forecast. (Including the results from the policy interest rate reduction in the middle of this year 1 time) with the results from the above issues appearing limited. In addition, it is expected that the momentum from government budget disbursement will spread more into the system during 2H67, helping to reduce pressure from emerging NPLs, facilitating management. ECL therefore maintains the group's profit forecast as before.
It is seen that the pressure on share prices is gradually being reflected in some share prices. While the assistance period is 6 months and only for vulnerable groups. It is seen as a halfway meeting between the government and the banking sector. To help debtors sustain themselves while the Thai economy waits for government stimulus measures.
Asia Plus Securities still chooses TTB appropriate value 1.98 baht, KBANK appropriate value 148 baht, BBL appropriate value 175 baht, KTB appropriate value 19 baht, TISCO appropriate value 106 baht, SCB appropriate value 111 baht and KKP reasonable value 49 baht
Dao Securities
There is a "negative" view from the MRR reduction because it is a reduction for all groups that rely on MRR. The view is negative from the MRR reduction, which from the inquiry of BBL's investor relations department found that it is a reduction for home loans. SMEs and all debtors with MRR-based debt, which makes the impact larger than the research team previously estimated that it would be only for vulnerable debtors.
The impact on the group was greater than previously expected. If all banks reduce their MRR like BBL, it will have a greater impact on the group's 2567E net profit than the Dao Securities research department. Previously estimated to be around -1.5-2.6% (originally expected to be -0.2-0.5%) by calculating the worst case scenario because it was based on all home and SME loans combined.
However, when compared with BBL, the bank's investor relations department revealed that the proportion of loans based on MRR rate was only 10% of the total loans. (Lower than the combined home and SME loans at 31% of total loans). Therefore, the impact on overall net profit will be less than what the research team expected.
Dao Securities continues to weigh KBANK and TTB as TOP Pick stocks because the profit growth trend this year will slow to 5% compared to the same period last year.
Krungsri Patanasin Securities
There is a Slightly Negative view towards the banking group regarding the announcement of a reduction in retail interest rates (MRR) by 0.25% for vulnerable customers (Retail and SME) for 6 months because the net interest rate differential (NIM) has decreased.
Looking at the worst case effects using assumptions Every home loan debtor and every SME loan debtor is included in the above project. It is expected that banks with this type of loan will be most affected, which is SCB, followed by KBANK, KTB, TTB, KTB, KKP, BBL and TISCO.
Still, NEUTRAL investment weight is maintained for the banking group, with KTB, TTB being the most preferred, followed by KBANK, BBL, SCB, KKP and TISCO.
DBS Vickers Securities
It is expected that such measures may be a negative sentiment for commercial banks in the short term. But the impact on the 2567 operating results is not much because each bank is currently restructuring debt for group customers. already fragile by reducing interest rates, extending debt maturity, etc.
KGI Securities
stated that they saw signs of asset quality starting to stabilize in 1Q/67, even though the domestic economy is still weak and the recovery of each customer group is uneven. The fact that the bank has focused on middle- to high-end customers and has used a conservative lending policy since mid-2566 has enabled large banks to manage credit costs and asset quality better than small- and medium-sized banks.
Although NIM fell faster than expected in 1Q/67, the ability to increase fee income and manage operating expenses to help alleviate the negative impacts.
This is because NIM is expected to be more stable because financial costs have passed their peak. Meanwhile, credit costs remained stable and net profit for 1Q/67 accounted for 26% of full-year profit forecast. Therefore, the opportunity for profit reduction is quite low, especially for KBANK/KKP because profits in 1Q67 account for 31%/27% of full-year profit estimates.
KGI Securities gives weight to KTB, BBL and adds KBANK and increases KKP's recommendation to "Buy" and increases the weight of banking stocks to Outperform (from Neutral) to reflect the trend of GDP expansion, which will facilitate. The bank increases income and reduces credit costs, while high dividends help limit downside.
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