Date of Report

21 October 2024

Broker Name

UOB Kay Hian

Company Overview

TMBThanachart Bank (TTB TB) is the sixth largest bank in Thailand, holding approximately 10% of the country’s credit market. The bank focuses primarily on retail lending, which constitutes 56% of its loan portfolio.

Stock Data

• Share Price: Bt1.83
• Target Price: Bt2.16
• Upside: +18.0% (Previous Target Price: Bt2.04)
• GICS Sector: Financials
• Bloomberg Ticker: TTB TB
• Shares Issued: 97,297.3 million
• Market Cap: Bt183,891.9 million (US$5,536.9 million)
• 3-month Average Daily Turnover: US$19.3 million
• 52-week High/Low: Bt2.06/Bt1.53

Recent Performance

3Q24 Results

• Net Profit: Bt5.2 billion (+11% year-on-year, -2% quarter-on-quarter)
• The results align with both UOB Kay Hian’s and consensus forecasts.
• The contraction in loans was attributed to a selective focus on building a quality portfolio and increased loan repayments.

Financial Highlights

• Remaining Tax Benefit: Bt11.7 billion, which will support growth.
• The bank plans to shorten term deposits in anticipation of a rate cut, expecting an increase in Net Interest Margin (NIM) thereafter.

Key Financials

• Total Gross Loans (3Q24): Bt1,261,299 million
• Net Interest Income (3Q24): Bt14,061 million
• Non-Interest Income (3Q24): Bt3,163 million
• Loan Loss Provision (3Q24): Bt4,764 million
• Net Income (3Q24): Bt5,230 million
• NPL Ratio (3Q24): 2.73%

Strategic Outlook

• The bank’s management indicated a contraction in loans was due to corporate loan repayments, with a continued focus on selectively growing a high-quality portfolio.
• TTB aims to reduce corporate loans while increasing exposure to high-yield loans, aligning with the anticipated conclusion of the peak rate cycle.

Valuation and Recommendation

• UOB Kay Hian has upgraded the recommendation to BUY, with a revised target price of Bt2.16.
• The valuation employs the Gordon Growth Model, indicating a price-to-book ratio of 0.85x for the forecast year of 2025, which is above the historical mean.

Earnings Revision

• 2024 Net Profit Forecast: Revised from Bt20,757 million to Bt21,164 million (+2.0%).
• 2025 and 2026 Forecasts: Also revised upwards by 4.5% and 4.7%, respectively.

Environmental, Social, Governance (ESG)

• The bank has initiated climate finance efforts aimed at reducing greenhouse gas emissions and promoting sustainable practices among clients.
• Financial literacy programs are in place to enhance public awareness and financial well-being.
• TTB is actively engaged in human rights risk assessments within its operations.