KTB-TTB merger set to form Thailand’s ‘Super Bank’

All eyes in the Thai banking industry are on the merger talks between the state-owned Krungthai Bank (KTB) and TMBThanachart Bank (TTB). When finalised, the deal will create a new “Super Bank” and become Thailand’s no.1 bank in terms of total assets.

KTB is a state-owned bank established in 1966 with the Finance Ministry being the largest shareholder. It has total assets of 3.64 billion baht, ranking in fourth position behind Bangkok Bank (BBL, 4.55 trillion baht), Kasikornbank (KBANK, 4.33 trillion baht), and Siam Commercial Bank (SCB, 3.49 trillion baht), respectively.

TTB, in fifth place, has total assets of 1.72 trillion baht. After combining the assets of KTB and TTB, the new bank could have total assets of 5.36 trillion baht, overtaking BBL to become the number one bank in Thailand in terms of asset size.

TTB was founded as Thai Military Bank (TMB) in 1957, before merging with retail bank Thanachart Bank in 2019.

Last year, KTB reported total revenue of 206.63 billion baht and a profit of 43.85 billion baht. TTB, meanwhile, reported total revenue of 97.17 billion baht and a profit of 21.03 billion baht.

Analysts believe that in addition to asset size, the merger will combine a vast customer base that will become stronger in the future, enabling the new bank to compete more easily with BBL, KBANK and SCB.

KTB’s strength lies in its solid base of government and civil servant clients, while TTB's strength is in retail loans, especially auto loans, where it holds the top position in the market.

The integration of both banks’ strengths in the digital banking sector will further enhance its competitive edge in the future, as well as open up new opportunities for partnerships, collaborations, and new business prospects.

Piriyaphon Kongwanich, an investment analyst at Bualuang Securities, estimates that the Thai banking industry will not see significant growth this year, with income from interest likely to remain stable and not particularly remarkable.

He cautioned that a slowdown is possible, due to the weak domestic economy, high household debt and contracting purchasing power. Other factors behind the projected slowdown in the banking industry include export challenges and the influx of cheap goods from abroad that are putting pressure on Thai SMEs.

He estimated that banks’ potential revenue growth will likely come from wealth management businesses, driven by Thailand's ageing population and the trend towards investing in foreign stocks. Additionally, there will be a continued focus on cost reduction through the transition towards digital banking, while maintaining low financial risks, thanks to high reserves in the Thai banking industry.