January, 20 , 2010

Thailand's Kasikornbank KBAN.BK reported a 31.5 percent rise in fourth-quarter net profit on Wednesday, confirming a general return to health in the sector thanks to a pick-up in loan demand and higher fee income.Top lender Bangkok Bank BBL.BK surprised the market with a 13 percent rise in net profit late on Tuesday.Profit increases in the sector reflect to some extent the effects of the global economic downturn a year earlier, but results out so far show a rise in non-interest income at some banks and a recovery in lending that augurs well for 2010.

"The turnaround in the economy this year will have a positive impact on the banking sector. Loans will improve and margins should be higher," said Sirinattha Techasiriwan, a banking analyst at Kasikorn Securities."We are still overweight on the banking sector," she added.The economy is recovering from a brief recession last year with the help of government spending, and that should push up loan demand, while interest margins should improve if rates go up as expected.