SCB X Public Company Limited (SET: SCB) recorded the highest earnings among Thailand’s financial group in the second quarter of 2023, boosted by an acceleration in net interest income amid the rate-hike cycle.
SCB reported a net profit of 11.9 billion baht for the second quarter of 2023, up 18.1% YoY, from strong top-line growth, effective cost control and prudent risk management. For the first half of 2023, net profit increased 13.8% YoY to 22.9 billion baht.
Bangkok Bank Pcl., Kasikornbank Pcl., and Krung Thai Bank Pcl., remains in the top four banks, booking over ten thousand baht of net profit for each bank.
Yuanta Securities (Yuanta) has given a “BUY” recommendation on SCB, seeing the bank has an outstanding growth, highlighted by a recovery in ROE to 10% for the first time in three years with a potential to continue rising, following SCB’s growth in other new businesses.
Yuanta noted that higher credit cost for the bank was not a concern and should not impact SCB’s operating growth. The brokerage company set a target price of SCB at THB140 per share, giving a 26.7% upside and maintained SCB as its top pick among the banking sector.
FSS International Investment Advisory (FSSIA) had a BUY call on SCB with a 2023 GGM-based TP of THB123 implies a P/BV of 0.85x, with a potential upside of 11% and very attractive dividend yields at 7% pa during 2023-25.
Meanwhile, KGI Securities stated that SCB’s2Q23 earnings beat expectations by around 10% due mainly to FVTPL gain and solid margin improvement. Guidance from the analyst meeting indicated that NIM improvement will continue but will be offset by higher credit cost. Although 1H23 earnings made up 57%, KGI maintained its full-year earnings forecast as excessively low C/I ratio at 40% in 1H23 would mean more operating expense growth acceleration in 2H23 which will drive 2023 C/I near 43%. KGI rolled over target price and applyderated PBV 0.85x on 2-yr average data, reaching new 12M-TP of Bt130 and downgraded rating to Neutralon SCB.
