CGSI keeps Neutral weighting on Thai banking sector, picks KBANK as Top Pick

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Summary · why it matters

CGS International (Thailand), or CGSI, said total loans for Thai commercial banks in the third quarter of 2026 are likely to show slower expansion, with combined loans at the banks covered by its analysts falling 0.1% month on month but still growing 3.0% year on year and up 2.4% from the end of 2025, after large corporate customers of BBL and KKP repaid substantial loans in August 2026. Banks posting positive loan growth were led by CREDIT, KTB and TISCO. CGSI estimates the eight banks it covers will report combined net profit of 57.4 billion baht, down 9.2% year on year but up 1.8% quarter on quarter. KKP is expected to post the strongest net profit growth in the group at 32.2% year on year and 4.0% quarter on quarter on the back of strong fee income. TTB is expected to grow second-fastest at 4.6% year on year and 0.7% quarter on quarter. On the other hand, BBL is expected to be the weakest, with net profit falling 24.5% year on year, followed by KTB with a 16% year-on-year decline. The banking sector is trading at a relatively expensive valuation of 0.94 times forward 12-month price-to-book against a low return on equity of 8.7% in 2026, but still offers a high dividend yield of 5.4% to 5.6% a year in 2026 to 2028. CGSI therefore recommends maintaining a Neutral investment weighting and selecting KBANK as its Top Pick, given its high share of fee income from wealth business at 18% of non-interest income in 2025 and its high dividend yield of 6.2% in 2026 versus the sector average of 5.6%.

Impact on assets 7

Financials± Mixed · 6 stocks
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Bangkok Bank PCL
BBL
▼ NegativeCapitalrelevance

BBL expected to be weakest with net profit falling 24.5% y/y after large corporate customers repaid substantial loans in August 2026.

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