Analysts maintained a “Buy” rating on shares of TMBThanachart Bank Pcl. (SET: TTB) following the bank’s better-than-expected second-quarter earnings.
TTB’s earnings for 2Q23 were THB4.6 billion (+6% QoQ and +33% YoY), and those for 1H23 were THB8.8 billion (+34%). Profits exceeded projections due to many factors: 1) higher-than-anticipated increases in net interest margin and fee revenue 2) credit costs below projections as nonperforming loans (NPLs) decrease. The NPL ratio fell to 2.63% from 2.69% in 1Q23 as a result of the bank writing down THB4.3 billion and selling THB1.8 billion in bad debts, respectively.
KGI Securities raised its earnings forecast for TTB by 6% and 2% for 2023 and 2024, respectively, and raised their price target for the stock to THB1.85 from THB1.65. The brokerage firm also kept its “Outperform” rating on TTB shares. In addition to the earnings forecast, KGI assumes credit costs of 130bps/130bps and loan growth of 3% and 5% in 2023 and 2024.
Daol Securities raised its price target for TTB from THB1.65 to THB1.85 and rerated its 2023 PBV from 0.70x (-1.0 SD below a 10-yr average) to 0.75x (0.0 SD above a 10-yr average), while also maintaining its “Buy” rating and optimistic earnings projections for 2023 and 2024.
Daol also revised net profit forecasts up by 7% each to THB17.0 billion (+20% YoY) for 2023 and THB18.4 billion (+8%) for 2024 as 1H23 net profit accounted for 56% of its earlier full-year forecast. This revision reflects higher-than-expected NIM and non-interest income.
Since TTB has prioritized high-yield loans, targeting current customers due to lower default risk compared to new customers, the brokerage firm advises investors to raise the position in TTB as earnings momentum is projected to rise up in 3Q23.
