TTB second-quarter 2069 profit beats expectations by 7%

Earnings
โดย thunhoon.com·TH·Read original
Summary · why it matters

TMBThanachart Bank, or TTB, reported second-quarter 2069 net profit of 5.5 billion baht, up 7% from the previous quarter and 10% from a year earlier, beating analyst forecasts by 7%. First-half net profit was 10.7 billion baht, up 6% from a year earlier amid an uncertain economy. Operating income grew 3% from a year earlier, and the bank maintained its net interest margin, or NIM, at 3.02% through asset and liability structure management, growth in high-yield lending, and lower deposit costs. Non-interest income grew on mutual fund fees, insurance, credit cards, and investment gains. TTB also completed its share buyback program of 21 billion baht, one year ahead of schedule. Total loan portfolio returned to growth of 0.5% from the previous quarter, although still down 1.8% from the start of the year, supported by high-yield retail loans such as home equity loans, which rose 3.9% from the previous quarter, title loan products, which rose 16.9%, and Cash2Go loans, which rose 10.5%, as well as corporate loans, which grew 2.6% from the previous quarter on the back of a risk-based pricing model. However, growth was offset by contraction in hire-purchase and SME loans, which fell 1.5% from the previous quarter as the bank reduced portfolio risk. Asset quality remained strong, with the NPL ratio stable at 2.93%, the coverage ratio rising to 157% from 154% in the previous quarter, and credit cost at 137 basis points, reflecting prudent provisioning. Although operating expenses rose due to special items such as revaluation of dealer relationships, impairment of online systems, and IT amortization, the cost-to-income ratio was 46%, still in line with the company's target. Analysts raised their 2069 and 2070 net profit estimates by 6.8% and 5.7% to 21.8 billion baht, up 6% from a year earlier, and 19.4 billion baht, down 11% from a year earlier. For the rest of the year, the bank will focus on restructuring its loan portfolio toward high-yield retail lending while reducing portfolio risk, tightening new loan underwriting, and proactively managing non-performing loans to preserve asset quality, while continuing to control costs to maintain NIM and push the cost-to-income ratio to the low 40s in line with the bank's target. The recommendation remains hold for dividends, but the target price was raised to 3.08 baht, based on 1.22 times price-to-book value. The market is focused on the remaining buyback authorization of about 14 billion baht, which expires in 2071, and expects a potential special dividend of up to about 0.14 baht per share, or a dividend yield of about 4.8%. However, management has not confirmed whether it will return capital through buybacks, dividends, or other means, noting that the current share price trades above book value, making buybacks potentially less appropriate at this time. What is more likely to happen first is an interim dividend announcement, expected at 0.07 baht per share, or a dividend yield of 2.4%. In terms of sentiment, the earlier share price decline related to ING Bank's share sale did not affect fundamentals, so the pullback is seen as making the stock more attractive for medium- to long-term investment to capture high dividends, while also giving the bank room to continue buybacks. On the technical side, the short-term chart opened a gap down to a low of 2.74 baht, closed with a spinning doji, and saw buying return with a doji candle. The positive signal is that it did not make a new low. The five-day SMA, acting as a downtrend resistance line at 2.90 baht, if broken and held firmly, would be a buy signal with a morning star reversal pattern. Resistance test points are 2.96 and 3.00 baht. For existing shareholders, the recommendation is to hold or add, with a chance to test resistance at 2.90, 2.96, and 3.00 baht. For those without shares, the recommendation is to buy short-term, focusing on holding support at 2.80 and 2.74 baht, which should not be broken.

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