Bank of Ayudhya PCLBAY
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Analyst upgrade to Buy with target price 47.50 baht despite profit miss.
Impact on stocks 1
Financials
Bank of Ayudhya PCLBank of Ayudhya, or BAY, reported second-quarter 2026 net profit of 8.3 billion baht, down 3.8 percent from the previous quarter and flat year-on-year, missing analyst forecasts by 9 percent. Pressure came from non-interest income, which fell 4.5 percent quarter-on-quarter, as investment gains, debt recovery income from the Clear Debt, Move Forward programme, and gains on asset sales declined. As a result, pre-provision operating profit dropped 2.9 percent from the prior quarter, even though net interest income slipped only 0.3 percent quarter-on-quarter and the net interest margin widened to 4.65 percent, helped by deposit cost management. The cost-to-income ratio stood at 45.5 percent, while provisioning expenses were stable. For the first half of 2026, net profit reached 16.9 billion baht, up 6.8 percent year-on-year, representing 52.3 percent of the full-year estimate. Total loans grew 0.4 percent from end-2025, or 0.8 percent excluding the impact of the HCID status change, supported by corporate loans which expanded 6.0 percent from end-2025, particularly in AI and electronics. SME loans contracted 4.2 percent from end-2025, and retail loans fell 2.0 percent from end-2025, remaining soft amid an uneven economic recovery. Asset quality, however, stayed resilient, with the non-performing loan ratio declining to 3.08 percent and the coverage ratio rising to 137.9 percent, even though credit costs came in at 2.36 percent, slightly above the target range due to additional provisioning to cushion against economic uncertainty. Analysts upgraded the stock to “Buy” with a year-end 2027 target price of 47.50 baht, based on a price-to-book value of 0.8 times. Key positives include a growing electric vehicle loan book, expected to reach around 10 to 15 percent of the auto loan portfolio, which currently accounts for about 25 percent of total loans. There is also an expectation of a higher dividend payout ratio from the current 30 percent, which is the lowest in the sector, given that the peer average payout ratio is 66 percent. BAY is seen as having room to raise its payout in line with the trend of increasing shareholder returns. The dividend yield for 2026 to 2028 is forecast at 3.1 to 3.4 percent, compared with the sector average of 5.6 percent, and an interim dividend for the first half of 2026 is expected at 0.40 baht per share.
Bank of Ayudhya PCLAnalyst upgrade to Buy with target price 47.50 baht despite profit miss.