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The share price of stocks in the banking sector edged mostly higher last week amid vaccine rollout in Thailand and a drop in Covid-19 new cases that boosted sentiment on both domestic and foreign investors. The Siam Commercial Bank Public Company Limited (SCB) rose ฿1.50/share or 1.4% during the week to close at ฿105.00/share last Friday. Kasikornbank Public Company Limited (KBANK) rose ฿10.50/share or 8.8% during the week to close at ฿129.00/share. Bangkok Bank Public Company Limited (BBL) rose ฿6.00/share or 5.1% during the week to close at ฿122.00/share. Krung Thai Bank Public Company Limited (KTB) rose ฿0.40/share or 3.6% during the week to close at ฿11.30/share. Bank of Ayudhya Public Company Limited (BAY) rose ฿1.75/share or 5.3% during the week to close at ฿34.50/share. Tisco Financial Group Public Company Limited (TISCO) rose ฿1.25/share or 1.4% during the week to close at ฿91.00/share. TMBThanachart Bank Public Company Limited (TTB) rose ฿0.03/share or 2.6% during the week to close at ฿1.17/share. Kiatnakin Phatra Bank Public Company Limited (KKP) rose ฿1.75/share or 3.0% during the week to close at ฿58.25/share. Maybank Kim Eng stated that it remained positive on Thai banks and expected positive news flow on the rising vaccination rate and lower cases per day to improve sentiment on the sector in the next 3-6 months. Maybank’s Top Picks were KBANK with TP THB160 (FY21E ROE 9.1%, 0.8x P/BV) and TISCO with TP THB110 (FY21E ROE 17.7%, 2.1x P/BV). The security company saw a buying opportunity on KBANK after its share price fell 14% QTD on rising infection rate and news of MSCI re-balancing. Meanwhile, Maybank preferred TISCO for its high earnings visibility, solid balance sheet and decent dividend yield. The Bank of Thailand (BoT) has extended the COVID-19 relief measures for SME borrowers to the end of Dec-21 from Jun-21 and encouraged the banks to restructure SME loans to meet the customers’ cash flow. The BoT also allowed the banks to pay interim dividends but the payout ratio is capped at 2020 level and 50% of 1H21 earnings. The central bank is also considering whether to extend a lowered 23bp FIDF fee, which will expire by the end of this year. Maybank stated that it had slightly positive on the news that banks could resume paying interim dividends this year as it implied that they have strong capital levels to withstand the impact of the pandemic. The extension of SME debt relief measures are in line with Maybank’s view particularly after the BoT extended relief measures for retail customers by another 6 months to the end of Dec-21 from Jun-21. Maybank reiterated the view that banks’ earnings will gradually improve from 2022, driven by rising vaccination and cross-border travel. In 2Q21, Maybank expected a lower sector NIM as a higher proportion of customers are under restructured loans with a longer payment period and lower monthly installments. Accrued interest receivables should increase QoQ given the higher proportion of loans under relief programs. On a positive note, Maybank expected the banks to book gains on investment that will offset the weak revenue outlook in 2Q21.